Whole life insurance policies typically pay a nice commission to the person selling the policy. Therefore, they can be eagerly sold, especially by less experienced insurance salespeople. Still, there may be times in your life when life insurance can make a lot of sense. For example, when you have children depending on your income, life insurance is often a must-have.
Is Life Insurance an Initial Step in Retirement Planning?
Life insurance is not where one begins to plan for retirement. Step one remains taking maximum advantage of any employer-matching program, like in your 401K or 403B plan. After you’ve exhausted that opportunity, the next retirement plan to consider is a Roth IRA. A Roth IRA provides tax-free growth, a feature no other account can offer.
Tax-Deferral Opportunities for Retirement Planning Besides Life Insurance
After you have exhausted all your other tax-deferral opportunities, it could make sense to consider a cash value life insurance policy in your quest for a secure retirement. Cash value builds up in a whole life insurance policy on a tax-deferred basis. If you find that you no longer need the life insurance later in life, you may wish to tap the cash value. It never hurts to have multiple sources of money during your retirement.