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Setting yourself up well for retirement starts early on, so thinking ahead is important. There are many ways that one can start planning, including factoring in life insurance for retirement.
It’s important to note that life insurance is not a retirement plan. While life insurance is not meant to fully prepare you for your financial needs later in life, it can help complement and strengthen your existing plan of action. Read on to learn more about how life insurance can help compliment your retirement.
Life insurance is a type of policy that can provide financial protection and peace of mind during your retirement years. These policies typically aim to cover expenses such as funeral costs, outstanding debts, and estate taxes, helping to ensure that retirees can leave a legacy for their loved ones without burdening them with financial obligations. Additionally, some life insurance options, such as whole life insurance, may accumulate cash value over time that can be accessed as a source of supplemental income or emergency funds during retirement.
Aflac offers a few options that may be able to help you prepare for retirement, such as an Aflac® Life Solutions – Term and Whole Life plan. If planned correctly, these policies may be able to support your life insurance retirement plans. Here’s how each works:
Term life insurance lasts for a specific period of time, instead of providing coverage for the entire life of the policyholder. It tends to be a little less expensive than whole life insurance, which may be appealing if you are looking to save money upfront.1
If you choose to go with a term life insurance plan, you may have more income to put toward other retirement funds.1 This route allows you to save more money early in life compared to whole life insurance. That money can be put toward a variety of other retirement funds, like an IRA. We recommend chatting with a financial advisor if this sounds appealing to you.
This type of life insurance retirement planning can also be helpful if there is a partner involved. The death benefit could help provide for them financially later in life if a partner were to pass during the term.1
On the other hand, whole life insurance lasts the entire life of the policyholder and may utilize a cash value benefit. Cash value typically grows in a tax-deferred account at a steady rate. In some cases, you may be able to access the cash value early or take out a loan against it. Being able to take out a loan against this value may prove beneficial when retirement rolls around.2 You may be able to use that loan to help cover basic retirement costs.
This depends on the plan you choose and the state you reside in. We recommend you chat with an Aflac agent to see if this option is available for you.
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
Many of Aflac’s life insurance policies may be able to help you reach your retirement goals. They all use different methods, so you’ll need to decide which plan makes the most sense for your financial objectives and lifestyle. There are also a handful of life insurance tax benefits that could possibly help with your retirement plans too.
For instance, the cash value portion of permanent life insurance plans is tax-deferred so this account grows a little faster than it would if taxes were being taken out. Also, some companies pay out tax-free dividends with any money left over after premiums, claims, and expenses are paid.2
Are you interested in factoring life insurance into your retirement plans? Term life insurance may be more useful if you are hoping to save more money early on so that you have more income to utilize as you get closer to retiring. On the other side of the coin, whole life insurance makes more sense if you are more interested in cash value and possibly taking out a loan. To see if these options are available and if life insurance is good for your retirement plans, chat with an Aflac agent today.
1 Investopedia. Strategies to Use Life Insurance for Retirement. Updated November 19, 2023. Accessed February 7, 2024. https://www.investopedia.com/articles/personal-finance/112614/strategies-use-life-insurance-retirement.asp.
2 Forbes Advisor - What Is Cash Value Life Insurance? Update October 16, 2023. Accessed February 7, 2024. https://www.forbes.com/advisor/life-insurance/cash-value-life-insurance/.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.
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Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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