Take advantage of life insurance in retirement
Retirement. Finally the time to enjoy life as you wish. Carry out your projects. Spend time with family. No matter what you want to accomplish, it takes money. In an ideal world, you will have planned it. You may even have to resort to different investment tools to ensure your subsistence during your last days. But the reality is, not everyone is fortunate enough to have an employer-sponsored retirement plan. You have to plan for it yourself, your retirement. One of the ways to do this is through life insurance. Here's how.
First, consider the "taxation" aspect of life insurance. Since the tax shelter from products like RRSPs, TFSAs or RPPs is limited, a retirement planning strategy focused on life insurance is ideal, especially for those who have bought the most out of these tools. Permanent life insurance, for example, not only offers protection in the event of death, but helps save money for retirement.
Permanent life insurance
Permanent life insurance is more than protection. It is also a financial tool that could allow you to withdraw money at a specific time using its cash value. Thus, by paying premiums periodically, an amount should not only be paid to your loved ones upon your death, in the form of a tax-free benefit, but you could receive dividends from it according to a pre-established plan.
So suppose that thirty or forty years ago, you made the choice to take out permanent life insurance. Now in retirement, you are ready to reap the rewards of that decision. By using your life insurance policy as a source of regular income, you will round off your ends of the month in an attractive way. Develop, with the help of your financial planner, a partial buyback strategy.
Permanent life insurance therefore allows you to build up retirement capital by generating regular income while allowing you to pass on an estate to your heirs.
Universal life insurance
This product is especially recognized for its flexibility. It can therefore represent an attractive investment option for retirement. His particuliarity? The risk. Although the basic operation is the same as permanent life insurance, universal has a yield risk, which is found to be less than that of an identical non-policy product (such as the TFSA).
Many experts will therefore say that universal life insurance is more protection than a profitable investment, but know that it exists all the same and that it can be an option for retirees who like to gamble!
Regardless, planning for retirement requires a good dose of reasoning, which should prioritize the absence of large debts (such as mortgages) and the presence of sufficient assets to live well independently. These assets can take many forms: RRSP, TFSA, RRIF, annuity, life fund, GIC, mutual fund, real estate sale or life insurance, among others.
There are also several variables in permanent life insurance, just like in universal. Contact your InfoPrimes advisor for details or other professional advice.
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