Retirement should be a time to sit back, relax and enjoy the benefits of all your former years of hard labor. Unfortunately, many people do not adequately save for their retirement and are unable to do this. They depend on the government to provide for them and often find out, too late, that is isn't enough. If they have a life insurance policy, that policy may provide some financial relief.
Step 1
Purchase a permanent protection life insurance policy. Permanent protection life insurance, including whole life, universal life, variable life and variable universal life, acts as a forced savings account that builds up a cash value. Later,when you retire, you can borrow against that cash value to pay medical bills, household bills and other living expenses. You are not required to pay back life insurance loans. If you choose to forgo repayment, the life insurance company will deduct the loan amount from the death benefit paid to your beneficiaries.
Step 2
Borrow against the cash value in your permanent protection life policy to purchase an annuity. According to the Texas Department of Insurance, annuities are typically used to build retirement savings and guarantee a continuous payment either over a stipulated time period or over the life of the insured.
Step 3
Surrender or cancel your permanent life insurance policy and use the cash value to pay bills or purchase an annuity. As you near retirement age your life insurance needs often change. Your home may now be paid off and you no longer need enough money to cover the mortgage. Your children may be grown and you no longer need money to cover their college educations. If this is the case and you do not need your permanent life policy, surrender the policy and request that the company pay you the available cash value.
Tips and Warnings
- If you choose to surrender your policy you are no longer required to make premium payments and that money can be funneled somewhere else.
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