How Do You Actually Use Whole Life Insurance to Create Retirement Income?

Insurance Pro Blog Podcast

Are you considering using your whole life insurance policy as a source of retirement income?

While ledgers and assumptions made by agents can be misleading, the process of distributing money from a whole life policy is not as complicated as it may seem.

In this episode, we'll dive into the practical aspects of using your whole life policy for retirement and help you navigate the potential stumbling blocks.

First, let's talk about the assumptions that agents often make when presenting ledgers.

They may assume a constant income stream, a fixed loan rate, and a known dividend scale. However, in reality, these factors are likely to change over time.

To ensure the sustainability of your retirement income, you must maintain a reasonable distribution rate. Typically, this is around 5% of the cash value when income begins.

Beware of ledgers that show results exceeding this withdrawal rate, as they may be based on overly optimistic assumptions.

The process of taking money from your whole life policy is relatively straightforward.

You can make periodic requests or set up an automatic EFT distribution through your insurance company.

In some cases, leaving the money in the policy until you need it and making periodic withdrawals can be more beneficial than taking a large lump sum at the beginning of the year.

If you choose to take distributions through loans, you'll need to monitor your loan balance. Also, be aware that loan interest accumulates and is added to the policy at the end of each year.

But what if you have an old whole life policy that wasn't purchased specifically for cash value? Can you still use it for retirement income?

The answer is yes, but the withdrawal figures may differ, and you might need to work with an agent to determine the appropriate withdrawal rate. If you've lost touch with your original agent, be prepared to pay out of pocket for assistance from a new agent.

In this episode, we'll guide you through the practical aspects of using your whole life policy for retirement, helping you make informed decisions and avoid common pitfalls.

Tune in to learn more about how to unlock the potential of your whole life policy and secure your financial future. ___________________________ If you'd like to explore what a whole life policy could do for you and potentially provide a source of retirement income, please click here to get in touch with us. We help people from all over the country do this every day.