Life Insurance and Retirement Planning

Planning your future with various insurance options. Heafner Financial can help you plan ahead.

Life insurance is a fundamental part of a solid financial plan. It provides peace of mind that if you were to suddenly die, your family would be taken care of. While this is a life insurance policy’s primary goal, it can be utilized as part of a comprehensive retirement income plan to protect your earnings and maximize your return on investment.

What Is Life Insurance?

Life insurance is a contract between you and an insurance company that promises to provide you with coverage based on your premium payments. When you die, your named beneficiary (typically your spouse or another immediate family member) files a claim with the insurance company to submit proof of death and obtain the death benefit payout.

There are two types of life insurance:

  • Term – Purchased for a specific period, such as 15 or 30 years. It only pays a death benefit to your beneficiaryThe different types of insurance and how to choose. Heafner Financial. if you die during the term up until age 95.1 This policy has no value once it ends.
  • Whole life – Covers you for life. It pays a death benefit to your beneficiary regardless of when you die, if the insurance is still active. The policy builds cash value you can borrow against, withdraw or invest.

Life insurance as a retirement strategy (LIRS) is best served by a whole life insurance policy because of the cash value guarantees, lifetime cost and predictability provided.2

How Life Insurance Policies Are Issued

Life insurance policies are issued in one of two ways – simplified issue or fully underwritten. With a simplified issue policy, you answer questions about your health when completing the insurance application. Fully underwritten policies require you to take a comprehensive medical exam and have lab work done.

Your current health status and age are the main factors determining your premium rate. Other factors include:

  • Gender – females typically receive lower rates because of longer life expectancy
  • Family medical history
  • Marital status
  • Location
  • Lifestyle – alcohol consumption, risky hobbies, smoker/non-smoker

What Is a Life Insurance Retirement Plan?

A life insurance retirement plan (LIRP) is a tax-efficient way for high-income individuals to supplement their retirement income. It’s like a Roth IRA in that it has tax-free characteristics, but unlike a Roth IRA, there are no earned income phase-out limits. Other features of a LIRP include:A Heafner Financial agent can help you plan out your financial future. Call today!

  • No contribution limits
  • Ability to structure tax-free payouts from policy withdrawals or loans
  • Income tax-free death benefits
  • No required minimum distribution
  • Potential creditor protection

Who Should Consider a Life Insurance Retirement Plan?

A LIRP may be a good investment if you:

  • Are insurable
  • Have fully funded all other qualified retirement options
  • Can afford to overfund a life insurance policy
  • Can afford to not take distributions for at least 15 years3

How to Choose a Life Insurance Retirement Plan

It’s advised that you work with a life insurance professional who can help you wade through the many whole life insurance products and the companies that offer them. They can design, implement and monitor the policy you choose, which is especially important if you plan on borrowing or withdrawing money.

As the policy is expected to accumulate cash value, the long-term viability of the insurance carrier should be a major consideration that your advisor can help you navigate. In general, mutual insurance carriers such as MetLife and New York Life are ranked in the top two percent of the more than 600 companies rated by the four major rating agencies.4,5 While dividends aren’t guaranteed, a company’s track record should factor into your decision.

Legacy Planning in Charlotte, NC

A LIRP is just one facet of a comprehensive retirement plan. To ensure your loved ones will be taken care of when youLegacy planning to help your family's future needs when you pass. Heafner Financial helps with all your financial needs. die, legacy planning must also be part of the process. Legacy planning involves tools, such as wills and powers of attorney, which should be utilized in conjunction with life insurance policies to protect your assets and keep your family financially afloat.

When legacy planning, it helps to have a financial advisor who understands the ins and outs of life insurance and retirement planning. You can count on the advisors at Heafner Financial to help you find the best investments for your situation. Call (704) 552-1230 or reach out to us online to set up a consultation today.


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