Paying beneficiaries money upon your death is not the only reason to purchase life insurance. In recent years, accessing cash value from a properly structured life insurance policy has become a popular strategy to help maximize tax-free income during retirement.
Depending on the type of policy you purchase, the cash value could grow at a fixed or variable interest rate over time. You may be able to borrow against the policy's cash value via a tax-free loan to help supplement retirement income.
If you pass away prematurely, your beneficiary typically receives only the death benefit (tax-free). However, there are some policies that can be purchased with an increasing death benefit option, which will grow as your cash value grows, allowing for a larger death benefit than originally purchased.
How LIRPs Work
- You purchase a personally owned cash value life insurance policy on your life
- Any growth in the policy’s cash value will be tax-deferred
- At your retirement, you may take tax-free loans or withdrawals from the policy’s available cash value to supplement your retirement income
- At your death your beneficiary will receive the policy’s death benefit income tax-free
Depending on your objectives and time horizon, this strategy might be one worth considering. Contact your Financial Advisor to discuss whether it’s right for you.
Working With Janney
Depending on your financial needs and personal preferences, you may opt to engage in a brokerage relationship, an advisory relationship or a combination of both. Each time you open an account, we will make recommendations on which type of relationship is in your best interest based on the information you provide when you complete or update your client profile.
If you engage in a brokerage relationship, you will buy and sell securities on a transaction basis and pay a commission for these services. Our recommendations for the purchase and sale of securities will be based on what is in your best interest and reflect reasonably available alternatives at that time.
If you engage in an advisory relationship, you will pay an asset-based fee, which encompasses, among other things, a defined investment strategy, ongoing monitoring, and performance reporting. Your Financial Advisor will serve in a fiduciary capacity for your advisory relationships.
For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.
By establishing a relationship with us, we can build a tailored financial plan and make recommendations about solutions that are aligned with your best interest and unique needs, goals, and preferences.
Contact us today to discuss how we can put a plan in place designed to help you reach your financial goals.
Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
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