Life Insurance is for the
Living ...
both for the beneficiary AND the policyowner. Read this success story about the living benefits of life insurance and consider how a cash value accumulation policy could help you achieve your financial aspirations. Chris and Traci are a married couple in their mid 40s looking for some assistance on what to do with additional income they will expect to earn in the next few months. They have two grown children, Aaron and Anna. The youngest, Anna, will be graduating from college this year. Up to this point, Chris and Traci have been contributing up to the company match on their 401(k) plans so they can afford to fund both Aaron and Anna’s college education. Now that both kids will soon be out of school, they are considering increasing their retirement plan contributions. However, they have also been talking to their financial advisor, Jack, on the benefits of using a Roth IRA instead of putting the additional contributions into the 401(k) plans because they are concerned about rising income taxes. Essentially, they would like to pay their tax bill now so they can get the income tax-free down the road. Other facts about Chris and Traci: • They have 20 years left on a 30-year mortgage for their primary residence, two car loans and a couple of small loans taken out to help pay for college expenses.
Recommendation: Jack talked to Chris and Traci about the benefits a cash value accumulation policy can have in their situation. This type of life insurance policy can have both tax-deferred growth and the potential to provide a tax-free income – accomplishing the same benefits as a Roth IRA but without the contribution limits. In addition to this potential tax-free income, the death benefit can be used to help cover some of their outstanding obligations should one of them prematurely pass away.
• Both Chris and Traci have life insurance equal to their annual salary through their employers. Neither own individual policies. • Their anticipated retirement age is 65 years old.
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