Preparing for your retirement needs careful planning to ensure you get the right benefits after years of hard work. Combining annuities and life insurance can be one way to achieve a comprehensive plan that sets you on the right track for a relaxing retirement.
Using annuities and life insurance as part of your retirement strategy delivers several benefits, depending on your specific financial situation.
What Are the Benefits of Using Annuities and Life Insurance ?
With an annuitiy you pay a regular premium in exchange for a guaranteed stream of income to cover your living expenses during your retirement.
Meanwhile, life insurance typcially helps your loved ones manage financially after your passing. But depending on the type of life insurance you have it can also help cover critical, chronic, terminal illnesses as well. You can use the money you access thru your life insurance policy to fund things like replace income, deductibles, co-pays, medical bills, experimental treatments not covered under your health insurance.
Here are 5 major advantages of combining annuities and life insurance.
1. Guaranteed Income and Death Benefit
An annuity and can give you a reliable source of income during your retirement years. Purchasing a period-certain annuity provides a guaranteed income within a certain period of time, such as 10 years. If you pass away during this period, your beneficiaries will continue to receive your income until its expiration. A conventional annuity pays our until you die.
Life insurance provides a death benefit for your beneficiaries after you die to help with things like debts, income replacement. Also if your life insurance has living benefits you will be able to access money to help in the case if you suffer major critical/chronic/terminal illnesses. As we age the chance of you encountering a major critical / chronic /termincal illness greatly increases. A question you should ask is, would your rather fight a major illness like cancer with money or no money.
It's important to work with a qualified insurance professional to identify the best ways to combine annuities and life insurance.
2. Tax Advantages
Both annuities and life insurance policies offer tax advantages that contribute to improving your retirement plan.
Annuities offer tax-deferred growth, which eliminates the need to pay taxes on your earnings until you withdraw them, reducing your tax liability while your annuity increases in value.
Life insurance proceeds are generally income tax-free for your beneficiaries. Also if your policy has a cash value, you can access money tax free thru loans to supplement your income or help with other life emergencies.
3. Diversification
Annuities let you forecast your source of income, while life insurance assures a potential lump sum payout to your beneficiaries.
This diversification helps to manage and protects your retirement savings from market fluctuations. It further balances your retirement planning and asset management.
There are different types of annuities and life insurance policies so it is important to talk with a professional to help put a plan in place for you.
4. Estate Planning
You can use life insurance as part of your estate planning strategy to transfer your wealth to your heirs in a tax-efficient manner. Combining annuities and life insurance further provides you with a comprehensive estate plan covering both lifetime income generation and a legacy for your loved ones. Other benefits include avoiding probate, minimizing estate and other taxes that may be due upon your death, and ensuring the fair share of the inheritance.
5. Peace of Mind
Both annuities and life insurance promote peace of mind for you and your loved ones. If you want to know for certain that you won't run out of money in retirement, annuities can help.
And with life insurance, you can be assured that your loved ones will be financially protected when you die. If you have life insurance with living benefits, you can have access to funds to pay for income replacement, deductables, co-pays, medical bills, experimental medical treatments not covered under health insurance, if you are diagnosed or a suffer with a major illness cancer, hearth attack, a stroke.
Having both annuities and life insurance gives you more flexibity and control over your financial assets. More importantly, this approach helps you address your care costs, bills, debts, and other financial expenses.
Retirement should be carefree and relaxing. Financial certainty is a key part of making sure you can enjoy this period of your life. Working with an insurance professional is the best method when considering your plan and strategy. An insurance professional will help to explain your options and guide you to a solution that maximizes these advantage. If you don't have an agent or advisor, consider my team.
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