3 Ways To Cash In On Life Insurance Policies For Retirement

It's nothing all that new. The notion of cashing in on life insurance policies for retirement has been utilized time and time again. But over the years, some things have changed, making it a less plausible idea that's pertinent to the insurance policy that you have and the company that you are using as a service provider.

Whole Life Insurance: According to Wikipedia, whole life insurance can offer a return that varies between 4 and 6 percent each year. These types of plans have minimal guarantees that can reach as high as 4 percent, and that can be augmented by dividends. Typically the death benefit is tax-free, but there may be tax implications if you cash out the policy for retirement, so speak to your account beforehand. Since all plans vary, you'd have to look at the "non-forfeiture values" to determine what cash-out value that your plan offers.

Universal Life Insurance: These plans usually offer the smallest annual return, according to Investopedia, but also have a return rate that ranges between 3 and 4 percent. The most lucrative aspect of this plan is that you can increase or decrease the death benefit by adjusting your premium payments. But Forbes warns that these plans are best left to fully mature because, "Universal life policies allow companies to raise premiums or siphon off cash values if they can't make enough from investments to meet their costs and still earn a profit."

Variable Life Insurance: This type of insurance is based upon the fixed income markets as well as equity. A CNN Money report explains that they can be beneficial because they can have annual returns between 3 and 8 percent. But if the markets that said insurance is based off fall, the results can be negative to the policy holder. So tread carefully.

Using life insurance as a retirement vehicle is not a terrible idea. But a good start would be to speak with your financial advisor to gain expert insight first. Chances are that there are plenty of other ways that you can invest your monies for a healthier retirement than just relying upon a life insurance policy

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