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Some whole life policies offer a savings and investment account with them so you can protect your beneficiaries while saving and investing tax-free or tax-deferred. You might think you already have a 401K so what is the point?
Southwest Insurance Center, serving the Austin, TX metro, wants you to understand why you need both accounts to best protect your financial future. Traditional individual retirement accounts (IRAs) have a maximum amount that you can contribute annually. Once you reach that amount, you cannot place more funds into the IRA that year. That limits the amount you can invest tax-free or tax-deferred.
The cash value account tied to a life insurance plan has no such limitation. You can contribute to it after paying your life insurance premiums and do so to your heart’s content. The money in your cash-value account also gets invested in much the same way the funds in your IRA does. Many cash value accounts use the S&P index as their fund index. As it earns, so does your investment account.
This type of dual-purpose insurance policy provides the standard type of death benefit of other permanent insurance policies. When you die, your beneficiaries receive a payment, the death benefit, which is the value of the policy you purchase.
But providing an investment account now and a death benefit to your beneficiaries isn’t the only way this type of policy helps you. You can borrow from or against the cash value account throughout the time you have the policy. That lets you build credit more safely since you have the collateral in the cash value account to repay the loan. If you already have pristine credit, you can choose to withdraw from the cash value account although this may incur a penalty.
Contact Southwest Insurance Center serving Austin, TX to learn more about life insurance with cash value savings and investment accounts. You can boost your retirement savings while you protect your family from the financial effects of your death.
Ph: 512-280-6100