This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Past Retire With Purpose podcast guest, Jamie Hopkins, highlights six of the most popular ways in which life insurance can be utilized – beginning with the basics and beyond.
📌Income replacement: This is why most get life insurance to begin with, as it acts as a safety cushion for loved ones in the event of your passing
📌College planning: You can put a policy in place for the sole purpose of leveraging that cash for tuition, however, growth could take much longer in comparison to saving in a 529 plan
📌Retirement planning: Life insurance can be utilized as another bucket in your portfolio, as it’s a conservative savings vehicle which allows you to put in dollars on a tax-deferred basis. It can also be utilized to replace Social Security or pension income, and can additionally help cover long-term care costs.
📌Tax diversification: Future tax rates are likely to rise, but life insurance policies with cash value grow tax-deferred, and beneficiaries can be paid federal income tax-free
📌Business needs: Again, in this instance, life insurance acts a safety cushion for continuity of business
📌Estate planning: Transferring wealth to family in the most efficient way possible is the goal. Life insurance provides liquidity to pay for expenses and estate changes upon your passing, and can also help mitigate taxes for beneficiaries
Power up your policies: If life insurance isn’t part of your retirement plan, you’re missing out on an opportunity that you most likely never considered. If you have old life insurance policies hanging out in a drawer at home, it’s time to get them re-assessed. This financial vehicle has changed so much over the decades.