PEORIA, ARIZONA / ACCESSWIRE / October 23, 2019 / Financial planner, Darcy Bergen has over 20 years of experience helping clients plan for retirement. As the owner of Bergen Financial Group, Darcy Bergen has encountered several clients who are seriously concerned they haven't saved enough money for retirement. Other people wonder how their life insurance policy can help them in retirement once their children are grown up and the house is fully or almost paid for. Because it's important for Darcy to address these concerns, he talks about how to use a life insurance policy to fund retirement.
Life Insurance Can Equal Retirement Income
For those who obtain a whole life or permanent life insurance policy early on in life, they have accumulated a cash value that has grown over time. However, Darcy Bergen warns his clients that term life insurance doesn't accumulate any cash value. With most whole life insurance plans, you can withdraw the cash value and use it as income during retirement. The amount policyholders can withdraw tax free is equal to the amount of premiums they have paid in over time.
According to Darcy Bergen, many people don't know that when they purchase a permanent life insurance policy, a portion of their premiums will accrue as cash value. A portion of their payment will go towards insurance and maintenance costs, and the rest will accumulate cash value.
Borrow From Your Life Insurance Policy
During retirement, if an unexpected expense happens, Darcy Bergen explains clients can often borrow money from their life insurance policy. Amounts borrowed are not taxable, therefore it is a great way to use the cash without paying tax on interest earned. Those who borrow from their life insurance policy are basically borrowing money from their death benefit. Darcy Bergen explains that although they're not required to pay it back, any unpaid balance will accumulate interest, and it will get deducted from their death benefit.
Making Your Policy Payments With Your Policy
According to Darcy Bergen, if, at any point during retirement clients need to move around their budget, they can pay for their monthly life insurance payment using their cash value. By using their cash value to pay for their policy, it will allow them to keep their death benefit without defaulting on the payments. Once their life gets back on track, they can resume paying for their premiums. Universal life insurance policies are more flexible in this regard than traditional whole life insurance policies.
Before making decisions when it comes to planning for retirement, Darcy Bergen recommends everyone to meet with a financial advisor. Although using life insurance to fund retirement is a possibility, Darcy Bergen will explore all other options with their clients.
Web Presence, LLC
SOURCE: Web Presence, LLC