Are you aware that there are currently very few tax free vehicles offered today? What if we told you there is an additional or alternative way to plan for retirement rather than only investing in a Roth IRA or a Roth 401k? We’d like to share a simple strategy that can benefit your tax free income pre and/or post retirement. It's called a LIRP strategy (Life Insurance Retirement Plan). Unlike IRAs and 401ks, there are no contribution limits and clients are not required to meet certain qualifications as such with Traditional IRAs and Roth IRAs in order to take advantage of the product. All money contributed into a LIRP grows both tax deferred and helps generate a tax free income for investors at any age the client decides to turn on income. Other benefits of Life Insurance Retirement Plans compared to IRAs and 401ks include no specific contribution limits, an initial death benefit, death benefits for loved ones resulting from premature death, and money that can be withdrawn prior to 59.5 years of age with no tax penalty. Life Insurance Retirement Plans are universal insurance plans that are becoming more and more popular today as there becomes a greater emphasis on starting to save for retirement at an early age. Investing in this highly considered insurance plan helps individuals diversify their investment portfolio. It also helps them and their loved ones by providing piece of mind that they will be protected from any unforeseen incidents financially. Below are some outlined examples of using a LIRP strategy. By starting at a younger age, investor’s contribution limits can be a lesser amount with the power of compound interest.
Main Benefits of a LIRP
Guaranteed Death Benefits
Tax Free Income
Tax Deferred Income
Premature Death Benefits for Loved Ones
No Contribution Limits
Examples of a Life Insurance Retirement Plan
*These numbers are assuming a 5.84% crediting rate
Life Insurance Retirement Plan
What is a LIRP or Life Insurance Retirement Plan?
A life insurance retirement plan (LIRP) is a permanent life insurance policy that uses the cash value component to help fund retirement. LIRPs have the same tax benefits of a Roth IRA, meaning you do not pay taxes on any withdrawals and cash gains are tax deferred. Indexed Universal Life (IUL) can be a great vehicle to fund this plan. LIRPs can improve your existing retirement savings accounts and protect against a dip in the market. In a down year for the stock market it might be more beneficial to pull from a cash value with a set rate of growth than from a retirement account with a depreciated value.