When planning for your future, there are many decisions to make. You need to consider things such as whether life insurance is right for you. Some may think putting money into a retirement account is a better option. That may not always be the best. You should work with a financial advisor for specific advice. However, there are a few things to keep in mind. Here’s a good way to compare these options.
Life Insurance Is Not Just About a Payment at the Time of Death
It is a misconception to think life insurance is just about the death payment. This is a payment received after the policyholder dies. The money goes to the listed beneficiary. Most life insurance policies offer this. However, some offer much more.
For example, a life insurance policy may offer retirement payments during your lifetime, too. A whole life policy, for example, may build up value throughout your lifetime. Once it earns enough value, it may send payments to you during your retirement years. This is an excellent way to fund your retirement years.
In many ways, this works the same as your retirement account might work. You can count on those payments helping to supplement your retirement. You can use them for anything you would like to use them for as well.
The Tax Aspects of These Accounts
Retirement accounts most certainly have tax advantages. Depending on the type you select, you may not have to pay taxes on the money earned within these investment accounts. Or, if you do, you may be paying a fraction of the cost in taxes that you would if you accepted those funds during your working years. Some types of retirement accounts also allow you to deduct your contributions in the year you make them.
Life insurance accounts are a bit different. However, these policies still offer tax benefits. Here, the tax benefit comes after death. The money you leave to your beneficiaries does not go through the probate process. No taxes are ever levied on the funds received. This means your loved ones receive a set amount of money at your time of death that they can use for any need they have.
Most people benefit from both retirement accounts and life insurance policies. Which is right for you? To find out, work with your insurance agent at 405.224.1000 to compare options carefully.
Also Read: Should You Receive Your Life Insurance Claim in a Lump Sum or Payments?