Life Insurance in Your Retirement Planning


Your retirement could last several decades. Have you planned well for the unexpected?

Last posted at Voya Financial

Flexibility. That’s what you need in your retirement planning because unexpected things will likely happen. A cash value life insurance policy could provide just the flexibility you need and be an important part of your retirement planning.

The last thing we want to happen during our retirement is to run out of money.  To help prevent this our retirement planning needs to accept that

  1. we could be retired for a long time and
  2. our savings may need to last for two lives (our own and our spouse’s) .

Retirement planning needs to have a margin for safety because it’s impossible to know what our world will look like 10, 20 or 30 years after we’ve retired.  We can help protect our retirement by building in a back-up plan, or a Plan B, to protect ourselves and our spouses/partners from developments we never expected.

Cash value life insurance policy can pay out an income tax free death benefit to your beneficiary to help strengthen their finances.  And while you’re alive, if you need to, you may be able to withdraw or borrow cash values for income tax free funds to help meet financial emergencies or supplement your retirement income.

Cash value life insurance can be an important component of our Plan B.

Cash value life insurance can help us deal with risks like these:

Reduced purchasing power 

Inflation and subpar investment performance can reduce the standard of living our retirement savings can pay for.

Health crises

Health emergencies can force us to spend many thousands of dollars of our retirement savings.

Living too long

We can’t plan our life spans. The longer we live the longer our savings need to last.

Natural disasters

No matter where we live, we can be affected by floods, tornados, fires, etc.  Damages from natural disasters may force us to spend our retirement savings sooner than we planned.

Tax increases

Federal and state tax rates are at or near historic lows. Governments will likely need more money to provide public services; tax rate increases may reduce how long our savings last.

Creditors’ claims

Some states allow life insurance policy owners  creditor protection.  Because life insurance death benefits are often used to maintain the financial security of spouses and children, many states give life insurance cash values and death benefits significant protection from the claims of creditors. The amount of protection varies from state to state, but the bottom line is that life insurance cash values and death benefits may be reserved for family members even when creditors are owed substantial sums of money.


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