Using Life Insurance For Retirement

A lot of people are aware of the importance of life insurance. Some do their best to keep up with their policy so that they are able to cover their loved ones’ needs long after they are gone. However, very few make it to the stage of saving up money for their retirement.
Retirement is about outliving your prime years of working for income and now have more time for yourself. Sadly, to some, it is having all the time in the world but not having the money to do what you have always wanted to do. It’s because that person failed to plan his future. We all have to save up for our retirement.
And here are the ways life insurance can help you build that plan:


Term insurance is considered to be the least expensive insurance. It guarantees the payment of the death benefit as it occurs in the policy term. In case the term expires, the client may opt to renew the term or simply allow termination of the policy. Term insurance can help you in your retirement as it costs way lesser than all the other plans and it gets you covered for the amount of your death benefit. With lesser out of pocket expenses, it gives you more room to build up your emergency fund and eventually, your retirement fund. This way, should anything happen, you still get to be covered by your benefits while you transition to building your retirement. Get the one with disability benefit too to make you better prepared for the unexpected.


The next step that the client needs to commit to, other than paying term insurance premiums, is to be faithful in setting aside for the emergency funds. By building an emergency fund, you put to good use the savings you got from availing the term insurance.
Experts say that our emergency fund should at least be 3 to 6 months worth of our salary. By setting aside for an emergency, it helps you prepare for sudden changes that might head your way. Another benefit is heading off debts. It is best to avoid debts so that you avoid paying for the extra interest, whether due to personal loans or from a credit card. You are having to use your emergency fund to delay you further from starting or continuing with your retirement contributions.


In case you weren’t able to attach disability insurance in your term insurance, you may also get another policy more focused on disability. It truly helps to be prepared for the future. In choosing your disability insurance, look for the guaranteed renewable and non-cancellable policy as it assures that premiums won’t increase and re-qualify. Of course, the policy will stay active for as long as the premiums are paid.
The best disability insurance is going for the policy that will protect the income you could have been earning had you not met the accident. It also protects those who depend on your income. Most believe that your most powerful wealth-building tool is your income. It also follows that without your income, you’ll have no way to save for retirement.


There are permanent life insurance policies that have a cash-value component that accumulates savings that the client may eventually put in the investment. However, with your insurance investments, it is usually the insurer that chooses where the investments go – which is a good thing.
Wouldn’t it be nice to leave your investments to experts? And with insurance investments, leaving it all up to the company is what exactly you are doing. By involving investments, it speeds up the building of your retirement fund. Although it is usually not guaranteed as earnings and interest earned are depending on market conditions.

Based on Materials from Investopedia