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When most people think about tax-free retirement income options they think of their traditional choices. The 401 (k) comes to mind as well as Roth IRAs and traditional savings accounts. As the cost of retirement goes up for many people, and life expectancy grows longer, you might be hoping to look into more tax-free options for retirement income. Life insurance policies are quickly becoming popular vehicles for tax-free retirement income. The Martin Insurance Team, serving Evergreen Park, IL, is here to teach you more about this option.
A New Option for Tax-Free Retirement Income
Although often thought of as a way of supporting your family after your passing, today’s permanent life insurance is being looked at in a whole new way. Whole and universal life insurance policies, which build cash value over time, can actually be treated as a form of tax-free retirement income. The insurance policy works like this: an individual invests in the policy through paying premiums. The insurer, which holds the policy, will deduct the expense of the policy. The remainder is considered the cash value of the policy. Depending on how long you have been paying in, the cash value can grow substantially. If an individual chooses to withdraw the cash value of the policy (for use during retirement) the money is tax-free.
What You Need To Know
If an individual chooses to access cash this way, it is considered a policy loan. The insurer will have certain rules and requirements on how this is done. You will need to review these rules and requirements to make sure you understand everything and are comfortable with this arrangement. Some of the most common rules include limitations on how many years the policy must be in place before a withdrawal is made and percentage caps on how much can be withdrawn.
Learn More
In order to learn more about this tax-free retirement income option, you should talk with an insurance representative. They will be able to answer your questions and help you decide if this is a good retirement option for you. If you would like to learn more, please contact our friendly staff at The Martin Insurance team, serving Evergreen Park, IL
