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How to Use Life Insurance for Your Retirement Planning

Explore whether life insurance fits your family protection needs and your retirement goals. Start with the coverage you need, the premiums you can afford, and the savings you already have.

What to know

• Protect your family: a life insurance death benefit can help beneficiaries with expenses after your death. Review who depends on your income and how long they need protection.
• Understand cash value: some permanent policies, including whole life and universal life, build cash value. Term life generally does not. Growth, guarantees, costs, and investment risk vary by policy.
• Review access to funds: cash value may be available through withdrawals or policy loans, subject to the contract. Loans charge interest; unpaid loans can reduce the death benefit. Taking money out can put coverage at risk.
• Check taxes before taking money out: surrender proceeds above your investment in the contract are generally taxable. A policy lapse with an outstanding loan can also create a tax bill. Policy type and tax rules matter; do not assume every distribution is tax-free.
• Compare the full cost: ask for premiums, insurance charges, surrender charges, loan interest, and both guaranteed and non-guaranteed illustrations. Review how the policy would perform with lower growth or higher costs.
• Consider your complete retirement plan: compare insurance with your retirement accounts, emergency savings, and other income sources. A policy may supplement a plan when appropriate, but projected cash value is not a guaranteed retirement paycheck.