Protect What Matters Most

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Certainly! Life Insurance Retirement Plans (LIRPs) offer a unique combination of life insurance coverage and retirement savings. Let’s explore the benefits of having an LIRP:

Tax Advantages: LIRPs, which are typically permanent life insurance policies (such as universal life insurance), allow you to accumulate a cash value component over time. The cash value grows tax-deferred, meaning you don’t owe taxes on gains until you withdraw them. Some policy loans and withdrawals may even be tax-free as long as they don’t exceed the premiums you’ve paid.

Flexible Access to Funds: You can withdraw or borrow against the cash value in an LIRP. Before age 59½, withdrawals and loans are tax-free if they’re less than the total premiums paid. After age 59½, all withdrawals and loans are tax-free. When you pass away, the death benefit is paid out tax-free to your beneficiaries, although it may be reduced by any withdrawals or unpaid policy loans.

Overfunded Policies: LIRPs allow you to contribute more than the minimum required to maintain the death benefit. This excess funding accelerates cash value growth, providing a tax-free income stream during retirement. Essentially, you’re building up more than just the necessary death benefit.

LIRP Loans: A key benefit is the ability to take policy loans from the cash value. Even before age 59½, you can use these loans to supplement retirement income. There’s no strict repayment schedule, but managing loans carefully is essential to avoid reducing the death benefit.

Legacy Protection: LIRPs provide legacy protection for your loved ones. While the primary goal is to use the cash value, the death benefit ensures financial security for beneficiaries.

Remember that LIRPs complement other retirement strategies (such as IRAs and 401(k)s) rather than fully replacing them. If you’re considering an LIRP, consult with a financial advisor to determine how it fits into your overall retirement plan.