Life Insurance Can Help Fund Retirement, but Consider Options Carefully | Law Firm Newswire

Life Insurance Can Help Fund Retirement, but Consider Options Carefully

Hook Law Center (formerly Oast & Hook)

Hook Law Center (formerly Oast & Hook)

Virginia Beach, VA (Law Firm Newswire) January 26, 2016 – The majority of individuals who purchase life insurance wish to replace their income should they die prematurely.

They can choose a term plan that ends upon retirement. Another option is to pay for retirement by using a permanent life insurance policy, and withdrawing funds from the plan’s cash reserve. However, there are possible drawbacks when using this strategy. According to experts, whole life insurance may not be an appropriate investment vehicle because it is costly and not liquid.

“When considering retirement planning, it is important to obtain sound investment advice in order to prevent any errors from jeopardizing a person’s future income,” said Andrew H. Hook, a Virginia financial planning attorney with Hook Law Center with offices in Virginia Beach and northern Suffolk.

Permanent life insurance may still be an important part of some investors’ retirement plans. The premiums for a permanent policy are much more costly than those for term policies, and it is more difficult to terminate the policy if it becomes too expensive. Furthermore, it is advisable to overfund the policy initially if the policyholder would like to make withdrawals of funds in later years. A permanent policy could be a wise retirement investment choice provided that it is within the budget of the policyholder. But if the cost is prohibitive, another type of retirement plan may be more appropriate.

Other attractive investment choices include individual retirement accounts and 401(k)s. Both provide tax benefits, and offer users flexibility in terms of investment choices and costs. This is especially the case with IRAs. If fees are absorbing too much of the profits, the investor has the option to change funds.

It is possible that cash value accounts may not realize high growth, and there may be fewer investment options. However, there are some favorable aspects of cash value accounts. Cash value accounts that are invested by the life insurance company in their general account have no association with stock market returns, and they do not decline in value in environments in which interest rates are increasing, as do bonds and bond mutual funds.

For those who plan to retire early, permanent life insurance can help pay for the early years of retirement. A retiree can have access to policy cash values on a tax-free basis via loans or partial withdrawals up to the cost basis of the policy. However, there can be unfavorable tax consequences if the policy lapses due to withdrawal of an excess amount of the cash value, or the loan balance was greater than the cash left inside the policy, and was not reimbursed.

Hook Law Center
295 Bendix Road, Suite 170
Virginia Beach, Virginia 23452-1294
Phone: 757-399-7506
Fax: 757-397-1267

SUFFOLK
5806 Harbour View Blvd.
Suite 203
Suffolk VA 23435
Phone: 757-399-7506
Fax: 757-397-1267
http://www.hooklawcenter.com/

  • It’s Time to Update Your Estate Plan!
    <p>Ensuring your estate plan is up-to-date is a critical part of ensuring that your lifetime’s work benefits you and your family the way YOU want it to. Our clients frequently ask us when they should review or update their estate plan – for this, there is no short answer. However, if any of the statements [...]</p>
    <p><a class="btn btn-secondary bravehart-read-more-link" href="https://hooklawcenter.com/2022/06/28/its-time-to-update-your-estate-plan/">Read More...</a></p>
    <p>The post <a href="https://hooklawcenter.com/2022/06/28/its-time-to-update-your-estate-plan/" target="_blank">It's Time to Update Your Estate Plan!</a> first appeared on <a href="https://hooklawcenter.com/" target="_blank">Hook Law Center</a>.</p>
  • Tips for Avoiding Identity Theft
    <p>A headache no one wants to deal with — but over 13 million Americans fell victim to last year — is identify theft. Take these steps to minimize your risk. Choose online passwords carefully. Use a different password for every online account; the passwords you use to log in to your e-mail address and your [...]</p>
    <p><a class="btn btn-secondary bravehart-read-more-link" href="https://hooklawcenter.com/2022/06/21/tips-for-avoiding-identity-theft/">Read More...</a></p>
    <p>The post <a href="https://hooklawcenter.com/2022/06/21/tips-for-avoiding-identity-theft/" target="_blank">Tips for Avoiding Identity Theft</a> first appeared on <a href="https://hooklawcenter.com/" target="_blank">Hook Law Center</a>.</p>
  • Estate Planning for Pet Owners
    <p>Several of us at the Hook Law Center are pet owners.  Our pets are important to us, like members of our families.  We find that many of our clients are pet owners, as well, but they often forget to make provisions for their pets in the event that they were to become unable to care [...]</p>
    <p><a class="btn btn-secondary bravehart-read-more-link" href="https://hooklawcenter.com/2022/06/14/estate-planning-for-pet-owners/">Read More...</a></p>
    <p>The post <a href="https://hooklawcenter.com/2022/06/14/estate-planning-for-pet-owners/" target="_blank">Estate Planning for Pet Owners</a> first appeared on <a href="https://hooklawcenter.com/" target="_blank">Hook Law Center</a>.</p>
  • Not Gone, but Occasionally Forgotten . . . Proposed Regulations Remind of Estate Tax
    <p>In 2022, the federal estate tax exemption is $12.06 million. This means that an individual can pass up to $12.06 million without paying a federal estate tax (Virginia and North Carolina have both essentially eliminated their estate tax). Thus, for the vast majority of Americans, there is no concern about having to pay a federal [...]</p>
    <p><a class="btn btn-secondary bravehart-read-more-link" href="https://hooklawcenter.com/2022/06/07/not-gone-but-occasionally-forgotten-proposed-regulations-remind-of-estate-tax/">Read More...</a></p>
    <p>The post <a href="https://hooklawcenter.com/2022/06/07/not-gone-but-occasionally-forgotten-proposed-regulations-remind-of-estate-tax/" target="_blank">Not Gone, but Occasionally Forgotten . . . Proposed Regulations Remind of Estate Tax</a> first appeared on <a href="https://hooklawcenter.com/" target="_blank">Hook Law Center</a>.</p>
  • How to Cope with End-Stage Dementia
    <p>No one likes to imagine what will happen if a loved one is diagnosed with dementia. The reality of a dementia diagnosis is difficult and heartbreaking to face, but if you fail to face it before the situation becomes a crisis, you may actually be doing your loved ones more harm than good. This is [...]</p>
    <p><a class="btn btn-secondary bravehart-read-more-link" href="https://hooklawcenter.com/2022/05/31/how-to-cope-with-end-stage-dementia-2/">Read More...</a></p>
    <p>The post <a href="https://hooklawcenter.com/2022/05/31/how-to-cope-with-end-stage-dementia-2/" target="_blank">How to Cope with End-Stage Dementia</a> first appeared on <a href="https://hooklawcenter.com/" target="_blank">Hook Law Center</a>.</p>

Tags: , , , , ,



Get headlines from Law Firm Newswire sent right to your inbox.

* indicates required