Retirement is a word that can excite a variety of feelings. If you are young, it is something that seems a long way off. For others, it can be a dream that feels very far off even though they are approaching the stereotypical age of retirement. For those more mature, it may be the stage of life in which they are living. Regardless, everyone in the Naples area, no matter what age, needs to make a financial plan for retirement and possibly a life insurance retirement plan. Today, we are going to discuss what a life insurance plan is and how it might benefit you.
What is a Life Insurance Retirement Plan?
A life insurance retirement plan, also know as a LIRP, is a life insurance strategy that is similar to the Roth IRA. The cash value usually grows over ten years with the policyholder over funding it over that span of time. The cash value of a LIRP is tax-deferred and usually, the funds are paid to the beneficiary tax-free.
Why a LIRP?
A LIRP can serve a variety of purposes, making it a helpful financial planning strategy for many. In one article a blogger compares a LIRP to baking soda: Nearly everyone in America has baking soda in their pantry; however, each uses their baking soda for a variety of purposes. Here are some ways to use a LIRP:
- A means for rounding out your retirement plan
- Avoid the inevitable higher future income taxes
- Pay debt and estate taxes
- Essentially become your own bank and make investment decisions that are more compliant to your goals.
- Pay for a beneficiary’s college education without them being disqualified from financial aid
- Pay the expense of long-term care
- A tax-free income during retirement
When we said that there are many purposes to a LIRP, we weren’t kidding. A LIRP is one of the most flexible financial tools that anyone can find helpful for reaching their financial goals and finding prosperity in the future.
The Basics of LIRP
Though a LIRP has been likened to a Roth IRA, there are considerable differences that must be mentioned. A LIRP isn’t necessarily a substitute for a Roth IRA. Understanding how a Roth IRA functions will help you understand better how a LIRP works to your advantage in your financial strategy.
No Limitations on Funding
Unlike a Roth IRA and some other retirement funding accounts, the IRS puts no limits on who contributes to your LIRP giving you options for increasing your funds.
Contributions Are Never Capped
Just as the IRA imposes limitations on who can contribute to this a Roth IRA , they also dictate how much you can put in your retirement account as well. However, there is not a limit to the amount of funds you can pour into your LIRP.
To learn more about a LIRP and other types of life insurance policies, visit our website and schedule an appointment to speak to a professional financial advisor. Naples Life Insurance & Annuity Advisors specializes in helping those in the Naples area find prosperity and meet their financial goals through the use of high-quality life insurance policies and annuity products. Visit our website today!