A life insurance retirement plan, or LIRP, is a dividend-paying whole life insurance policy structured for maximum cash value and tax advantages. Rather than funding a 401(k) or IRA, which can have high management fees and unpredictable returns, a LIRP earns a guaranteed interest rate and non-guaranteed dividends to grow the cash value of your policy, protected against market volatility. Upon retirement, you can use the cash value of your account to cover your living expenses. There are no penalties for early withdrawal. Your policy also has a death benefit, providing your loved ones with a lasting legacy (often tax free) after you’re gone.
Term life insurance doesn’t insure the policyholder for the entirety of their life; the number of insurable years are predetermined before taking out a policy. If the policyholder outlives that time frame, the policy will expire and there will be no payout. Term life insurance does not earn cash value.
Term life insurance may be best for people whose income covers the costs of temporary expenses for their family, like tuition or a mortgage. The term of the policy is determined by the number of years needed to pay off the expense, and ensures a family member won’t be burdened with the cost in the event of an untimely death.
Limited pay whole life insurance is a type of dividend-paying whole life insurance policy where the total cost of premiums are paid over a predetermined set of years.
Limited pay whole life insurance can be a good option if for policies purchased later in life. It allows the policyholder to stop funding their policy in retirement while still earning cash value, thereby increasing retirement income.
Whole life insurance is a type of dividend-paying life insurance that earns a guaranteed cash value at a predetermined fixed rate. Tax-free, low-interest loans can be taken against the cash value of a whole life insurance policy. This is known as a living benefit.
Whole life insurance insures the policyholder for their entire life and pays out the death benefit (assuming there are no unpaid policy loans against it) to a beneficiary when you die. Because it has both a living benefit and a guaranteed death benefit, it is considered a tool for building wealth and leaving a legacy.
A Wealth Maximization Account is a uniquely structured dividend-paying whole life insurance policy that rapidly earns cash value by using a paid-up additions rider, while also offering tax advantages. It provides an improved rate of return and grows faster than a typical whole life insurance policy.
Like typical whole life insurance, the policyholder can take tax-free, low-interest loans against the cash value of their Wealth Maximization Account, and it ensures them for their entire life. The death benefit (assuming there are not unpaid policy loans against it) will go to a predetermined beneficiary upon the death of the policyholder. Because it has both a living benefit and a guaranteed death benefit, it serves as a tool for building wealth as well as leaving a legacy.
Wealth Maximization Accounts are created through mutual insurance companies. At Paradigm Life, we work with top mutual insurance companies, like MassMutual, Guardian, Penn Mutual Life Insurance, New York Life, OneAmerica, and more, to customize the best policies for our clients.