Depending on the type of policy you choose, life insurance can provide living benefits as well. These are funds you can tap into during your lifetime to help cover medical expenses, college costs or retirement income needs.

Also, while many financial vehicles create taxable income, life insurance typically does not. This helps ensure your loved ones receive the full end-of-life benefit amount that you've intended for them.

 

Consider the advantages of permanent life insurance

In addition to providing a tax-free end-of-life benefit1, it can provide lifelong coverage and the ability to build wealth that can be used while the policyholder is still living.

  • Cash withdrawals—some policies permit cash withdrawals from a permanent life policy, although sometimes it reduces the end-of-life benefit
  • Loans—some policies allow the policyholder to secure a tax-free loan against the policy’s cash account, frequently without a credit check2
  • Tax-deferred growth—the cash value in the policy won’t be taxed until it’s withdrawn

Riders

Riders are, essentially, policy add-ons that provide additional types of coverages—sometimes at no cost.3 When combined, the base policy and the riders can help you build a customized policy to fit your specific needs beyond just the living benefits. An income for life rider, for example, offers cash values that can be used to produce a guaranteed stream of payments to the policyholder.

 

Evolving coverage

In the years leading up to retirement, the greatest risk is premature death. At this stage, the biggest concerns are most likely income replacement, mortgage debt payoff, and funding college education. Many opt for term life insurance during this time, which can help safeguard family members with simple and straightforward protection against premature death. 

In retirement, though, risks change dramatically. Most likely, children are independent and through college. But rising health care costs and a potential reduction in Social Security income with the death of a spouse affects many retirees. Financial risks such as inflation, market volatility, low interest rates, and an increase in tax rates may threaten financial security. 

Permanent life insurance can play a role in maintaining peace of mind in retirement by increasing income and providing withdrawal and loan options. For example, an index universal life policy—a form of permanent life insurance—offers flexibility in premium payments in addition to lifetime coverage, cash value and a tax-free end-of-life benefit1, all while protecting you from market risk.

 

Customize your choices

Today’s life insurance is a versatile tool to establish and maintain financial protection. Discover your options with a financial professional today.

1 Death Benefits are generally excludable from the beneficiary’s federal taxable income under most circumstances and under current federal income tax law.

2 Based on current federal income tax law. Assumes the use of withdrawals to basis and/or policy loans. If the policy is classified as a modified endowment contract (see IRC section 7702A), withdrawals or loans are subject to regular income tax and an additional 10% tax penalty may apply if taken prior to age 59 ½. 

3 There may be a charge for each rider selected. See the rider for details regarding the benefit descriptions, limitations and exclusions. Adding or deleting riders and increasing or decreasing coverage under existing riders can have tax consequences. Policy owners should consult a tax advisor prior to exchanging their policy. Riders are not available in all states.