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How Life Insurance Can Help You Save for Retirement

By March 1, 2019April 1st, 2019No Comments

Life insurance helps you plan for the future by ensuring that loved ones will be financially taken care of when you die, and providing coverage for expenses like mortgage payments, funeral costs, health care bills, and other necessities that your beneficiaries may not be able to cover without it. For the majority of Americans, the home they own is their only asset. But assets can also include financial tools, as the money generated assists in retirement.

Term Life Insurance

With a term life insurance policy, you pay relatively low premiums for high coverage and the policy remains effective for the duration of the term. Term life insurance can complete your financial strategy. Your insurance premiums may be quite low, depending on your age, coverage amount, and term length, so you’ll have plenty of cash left over after paying the premium to invest.Since other assets may take decades to appreciate into their full value, you could die before your investment has matured. To that end, it is very easy to fit an IFS Insurance policy into your financial plan.

Whole Life Insurance

Some life insurance policies function as an investment vehicle, paying higher premiums but some of which are invested in a fund. In this case, the policy can be considered an asset.Such life insurance policies are called permanent life insurance policies, and they have a cash-value component that increases the longer you hold the policy. Each time you pay your premiums, a percentage of the premium goes toward paying for the death benefit and a percentage goes into an interest-bearing savings account. Whole life insurance lasts the duration of your life and works great as a forced savings account, in that you’re obligated to keep investing in your savings in order to keep the account in effect.

Such as a 401(k), investments into a cash-value fund are tax-deferred. The policy will still pay out a death benefit to your beneficiaries when you die, but over time this death benefit is gradually replaced by the cash value. Eventually, the cash value will represent the entirety of the death benefit; if you were to pass while the policy is in force, your beneficiaries will receive the cash value, which earns interest. An IFS insurance agent can help you better understand how you can benefit from the policy.

If you want to use a cash-value life insurance policy as an investment tool, you have options beyond whole life insurance. Although a permanent life insurance policy with a cash-value component will help you save for retirement, the best way to maximize your returns is to combine a term life insurance policy with a traditional savings account.

About IFS Insurance

At IFS Insurance, we specialize in protecting homeowners and renters throughout Delaware, New Jersey, Pennsylvania, and Maryland. Our quality solutions and commitment to excellence has allowed us to serve these states for over 50 years. For more information about our products, we invite you to contact us today at (800) 598-0420