5 Reasons Life Works
1) Flexibility. The number one reason is you are not subject to the 59 1/2 rule. You can take money out without penalty from the IRS even before you reach that magic age of 59 1/2. It's your money. You also are not subject to the RMD or Required Minimum Distribution at 70 1/2.
2) Protection. With the initial premium you immediately also create a sizeable death benefit that will protect your heirs in the event of an untimely death. With an IRA or 401k you simply leave a lump sum of what you've contributed plus any earnings. Possibly even taxable and certainly not enough. With a life option you leave the death benefit to your heirs free from income tax and free from the probate process.
3) Income for retirement. That's right, income for retirement. You can use your accumulated account for retirement income. Structured properly it can actually be tax free income. Really?
Yes! This is a very serious consideration for many as we begin to look down the road. Will income tax rates be higher in the future? Most agree that it's a strong possibility. Having a guaranteed income that's also tax free is very attractive to many investors.
4) Health / Living Benefits. Certain life policies also now offer a really attractive benefit to many baby boomers. We are all living longer. The risk of needing some type of long term care continues to increase. The cost of living in a care facility or even home care is the biggest financial risk many will face in retirement. Properly structured life policies can actually allow you to access a percentage of the death benefit while you are living for long term care or home health care. This eliminates the excuse that many give for not having a traditional LTC policy. If you need it, it's there. If you don't, then your beneficiary receive a sizeable lump income tax free. This is an option available for lump sum contributions as well.
5) Legacy. Imagine being able to leave a financial mark after your gone. For some, this means making sure your family is protected. For others, making sure college is paid for children or grandchildren. Still others want to leave money to a charity or church to carry on the good work for years to come. There is no better way to make certain of your financial legacy than through the use of life insurance.