Did you know that Life Insurance can actually be an integral part of your retirement income?

Life insurance products have changed dramatically in the last several decades, as most company retirement pensions have disappeared and employees are now responsible for their own retirement planning through products like 401Ks.  There are pitfalls, however, to relying on just your 401k at retirement.  Click here to better understand what retirement planning really needs to cover, and then contact us to learn more about how life insurance can be one of THE BEST ways to guarantee a steady income in retirement.

Understanding Life Insurance Options

There are two types of life insurance:

 -Term Life Insurance

 -Permanent Life Insurance

Term Life Insurance

Term life insurance is a lot like renting a home.  You pay rent (your premiums) monthly until the end of your agreed-upon lease period (your “term”); but by choosing this type of policy you build no equity in the home.  If you choose to leave (discontinue your policy), you essentially have nothing to show for it.

Many people purchase term life insurance when they begin their families and pay their premiums until their initial term is up.  Unfortunately premiums often jump up significantly after the initial term, often to a price you cannot afford.  This is why many people cancel their term life insurance policy as soon as the premium jumps to a painful level.

This is also why 99% of term life insurance policies never pay a death benefit.

Term life insurance is an adequate policy type to purchase in certain circumstances: for example if you have a bank loan that requires that you carry life insurance; or if you cannot afford a permanent life insurance plan, there are term life insurance policies that can be converted to a permanent life insurance policy.

Let Southwest Health & Life show you life insurance options that best fit your life circumstances.

Permanent Life Insurance

If we continue the analogy used above, permanent life insurance is like buying your home instead of choosing to rent it.  Permanent life insurance premiums are slightly higher than term life insurance premiums, but you are also building equity with every monthly premium you pay.

More importantly, you can access/borrow against the equity you are building whenever you need to, with no penalty.  When you use your permanent life insurance policy for “loans” to yourself when a “life happens” moment occurs, the interest still compounds in your policy, meaning the overall value of the policy still grows.

This is how having a permanent life insurance policy can be a valuable tool to maximizing your overall life savings for retirement—because you can borrow against the policy when necessary, without stopping the compounding growth of interest. This means more money for you when you do retire.

Permanent life insurance also differs from term life insurance in that your premiums cannot be changed, regardless of age or health.  Once you purchase your policy, you have locked in your rates.

If you would like to learn more on how to use a permanent life insurance policy to maximize your retirement income, please call us or fill out the contact form on this page and an agent from Southwest Health & Life will reach out to schedule an appointment with you.