Life insurance plans are primarily designed to offset the financial impact of the death of a loved one but can also be used to help save retirement income. Specifically, the cash value component of a whole life policy can complement savings from other retirement accounts.
Both a 401(k) and life insurance can serve as important investment tools, but a 401(k) is specifically designed for retirement. LIRPs are better for estate planning since your loved ones receive a death benefit if you pass away.
Planning for retirement well in advance can give you ample time to plan, save and build a cushion for making investment mistakes. Starting the process early also allows time for your retirement fund to grow and earn interest as you continue to work.
Cash value life insurance plans can enhance your savings from more traditional retirement plans like IRAs and 401(k)s. However, they are not generally relied upon as the sole source of retirement income. If you’re looking for a versatile product that offers several benefits, cash value life insurance could be a sensible option.
