Life Insurance Policies That Pay for Retirement

Posted by ankita on November 25th, 2016

Money during retirement can be a problem. It is best to have as many sources as income. Some life insurance policies can become very profitable after you retire.

Permanent life insurance

Policies that offer permanent coverage build cash value at a guaranteed rate or at a variable interest return rate. If you buy this policy when you are in your 30s by the time you retire your policy would have gathered a good amount of money. Having life insurance will not affect your Social security benefits, because a policy is not counted as an estate. Furthermore, your investment grows tax-deferred and it is taxable only if you withdraw an amount higher than the policy's value.

You can also borrow against the policy, reducing the total coverage. This can be used as a way of paying for emergency, like healthcare costs.

Remember though that these policies are a long-term investment. If you are close to retirement, your policy's cash value will not have enough time to grow. Also, be careful, because premiums are expensive!

Life annuities

If the market is doing well, you can purchase a variable annuity. Your money will be invested in different account and after a several years the agency will make regular payments. Annuities can be used to improve your financial gains during retirement as you make the investment while you are younger and receive the benefit during retirement.

Many variable annuities guarantee a rate of return, so if the market does badly, your investment will be protected. Variable annuities sometimes have expensive fees that can eat up a big chunk of your investment. Retirement Insurance Policy is also essential to buy an annuity when stock-market is doing well, otherwise your investment will stagnate.

A return of premium policy

When you buy temporary life coverage, you will not receive anything after the policy expires. A return of premium policy, however, will pay you back the full cost of the policy if you have survived it. If you die before the policy expires, your beneficiaries will receive the full benefit.

If you purchase a 30 years policy when you are 40, you will receive the premiums back when you will be 70, just when you need it the most! The downside is that return of premium policies cost more and inflation will lower the value of the amount you will receive.

In conclusion, there are efficient ways of saving for retirement and having life coverage at the same time!

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