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The journey to retirement is a time of excitement and possibility. But it can also be a time of stress and anxiety. Thankfully, with a well-thought-out strategy, you may be able to relieve some of that stress and anxiety.
While life insurance is primarily intended to protect your family if something should happen to you, there may be additional reasons to consider including it within your overall retirement strategy. Special tax status means that as the policy’s cash value increases, you may not have to pay taxes on the earned interest. Additionally, you may even be able to take money from the policy for tax-free income in retirement. It is important to remember that loans and withdrawals from a life insurance policy may reduce the death benefit.
Like all great adventures, a little preparation can go a long way!
Please keep in mind that life insurance policies typically require health underwriting and, in many instances, financial underwriting. The policyowner of a life insurance policy with long-term care benefits typically needs to meet certain qualifying conditions in order to access long-term care benefits within the policy. Policy loans and withdrawals from a life insurance policy will reduce available cash values and death benefits and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the life insurance policy in-force. In the event of a lapse, outstanding loans in excess of unrecovered cost basis will be subject to ordinary income tax. Withdrawals are generally income tax free, unless the withdrawal amount exceeds the amount of premium paid. This content is for informational purposes only and should not be used to make any financial decisions. It is recommended that you consult a tax advisor for tax advice regarding life insurance policies with long-term care benefits.