Using Whole Life Insurance For Retirement Income - Q&A Thursdays | IBC Global

Using a cash value life insurance policy in retirement for tax-free income. This is a concept that has been around for a long time and is very, very popular. A unique feature to a cash value life insurance policy is the cash value component is completely tax-free. If I set it up properly, if I don't trigger a taxable event, it can grow tax-free and I can also access it tax-free. This is done by taking policy withdrawals and also policy loans and not paying loans or loan interest back. We've got a lot more information on exactly how that works and the dangers to be aware of because a lot of times it's just said, hey, this is tax-free, it's the best thing since sliced bread. But there are certain pitfalls and things we need to be aware of before we just jump into it, like anything, of course. But when it comes to utilizing a policy for retirement income, so, we're going to look at an example here. Up on the screen, we see a policy of an individual funding a policy for 10 years. He's 55 years old, he's got a goal of taking income in 10 years at age 65, after 10 years and then also at age 75. Now, when we look at income scenarios, before we get there actually, we want to show him how to maximize the cash value, maximize the upfront cash value, the growth, short-term, long-term, everything. But you'll notice on those 3 samples you see on the screen, they're the exact same policy. All we're doing is showing him what it looks like based off of the guarantees, an absolute worst case scenario, the basic dividend rate, which is where things are today and then also an aggressive assumption using an index strategy. The thing is, we want to look at more than just the best case scenario. This is where so many people fall into the trap of expecting to have a lot of money because it's what they're shown and this is a new concept or sounds new to them and then the policy doesn't pan out, performs closer to the guarantees or dividends and then we're upset because we were banking off X amount of dollars. So the first thing we always want to make sure that we do is set expectations properly, looking at different companies, looking at the most conservative scenarios and aggressive ones and middle of the road. But then also when we look at the income, do the exact same thing. So this individual had a goal of distributing a certain amount of income so we decided to show, okay, well let's show him how he can attain that. He wanted $125,000 today but also accounting for inflation so we needed more income. You'll see what it looks like if he distributes money based off of the guarantees only. Worst, worst case scenario, can't get any worse than this. Based off the present dividend rate and then also the index feature, more aggressive. The point here is, if you are considering using a cash value life insurance product for retirement income and you want it tax-free, a lot of people want this, especially where tax brackets are and where everything is right now, this is a great way to separate yourself from that in a sense. A private contract that can distribute money completely tax-free regardless of what happens with taxes and such, this comes out tax-free. The thing is, making sure expectations are set properly and that the policy does not implode and trigger a taxable event which can happen down the road. So we've got several case studies and information that provides just this. If you enter your contact information, please feel free to do so or if you have specific questions and you prefer to reach out, call or email us anytime and we look forward to connecting with you. Hey guys, Steve Parisi here. If you enjoyed the content you just saw, please subscribe, like, and hit the notification bell for future videos. If you'd like more information or to see some custom policies for yourself, feel free to call or email our offices at the contact information below.