Build retirement cash with variable life insurance


With variable life insurance, a form of permanent (cash value) life insurance, you spread your premium payments among sub-accounts that look like mutual funds. You get tax-free accumulation even if you transfer money from one sub-account to another.

Typically, you will periodically pay life insurance premiums, which is a form of periodic fixed-money purchase in the account. There can be many sub-accounts to choose from, for example different types of stock accounts and bond accounts. When choosing among them, consider your time frame and the balance of your other investments.

If you have strong sub-account performance, you can maintain the same premium payments and see your cash value and policy death benefits increase. Alternatively, you can reduce premium payments in the future while maintaining the same amount of insurance coverage. Thus, variable life insurance allows you to capitalize on growth. In addition, you will benefit from all the tax advantages of permanent life insurance:

There is no investment income tax inside the policy. You can access a portion of your cash value without having to pay income tax. When you want the money in your policy’s cash value, you can make tax-free withdrawals until you reach the amount of premiums you’ve paid. After this point, you can take tax-free policy loans.

There will be a substantial payout to your beneficiary after your death, free of income tax.

The bottom line is that variable life insurance can provide you with tax-free retirement income as long as you manage the policy carefully, as well as a tax-free death benefit for your loved ones.


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