Supplemental income for retirement plan

Transcription

1 KANSAS CITY LIFE INSURANCE COMPANY Supplemental income for retirement plan

2 Using a tax-advantaged option for creating supplemental retirement income Permanent life insurance is gaining popularity as a retirement funding option due to pure economics. In today s world of low interest rates and a fluctuating stock market, the tax advantages of life insurance make it an attractive option for retirement savings. We call this strategy a Supplemental Income for Retirement Plan (SIRP). Cash values within a permanent life insurance policy are protected from current taxation, so it grows tax-deferred. Additionally, when you withdraw or borrow money from the cash value account of a life insurance policy, you don t have to sell the asset as you do with stocks, bonds or certificates of deposit. Thus, you can withdraw your basis (the amount you have paid in premiums) or borrow money from the policy without having to pay taxes. It is tax-free income. 1 It typically takes 15 or more years to accrue enough cash value in a policy to generate a meaningful stream of retirement income. However, once you have built up cash value, getting the money out is easy. There is no approval process so it usually only takes a few days to access your money and there are no taxes on the money you take out if your policy is structured correctly. 1 Withdrawals and policy loans will reduce the available cash value and death benefit and may cause the policy to lapse or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force.

3 SIRPs provide a Roth IRA alternative Individual Retirement Accounts (IRAs) are a common option for people to generate retirement income. A traditional IRA allows a deduction on contributions, subject to income limits, and assets grow tax-deferred. However, all withdrawals are taxed at ordinary income rates and individuals must begin taking required minimum distributions at age 70 ½. Roth IRAs differ from traditional IRAs in that contributions are not deductible, but assets are tax-deferred and distributions are tax-free. A Roth IRA, however, has both contribution limits and income restrictions. Life insurance can be used as a good savings alternative for individuals who are not eligible for a Roth because: 1) they have an income that is too large to satisfy the Roth requirements, 2) they have no income or 3) they want to save more than allowed by contribution limits. Life insurance has no contribution limits, cash values grow tax-deferred, distributions are tax-free and there are no minimum required distributions. This makes a permanent life insurance policy a good alternative to a Roth IRA.

4 Fifteen reasons why life insurance is a good option for retirement income Many people take advantage of the common options for setting aside tax-advantaged funds with 401(k)s and IRAs (i.e., qualified plans). However, savvy individuals are seeking additional tax-advantaged options. Utilizing permanent life insurance for supplemental retirement income is one of these options. There are 15 reasons why life insurance is a good option for retirement income. These are: 1. Cash accumulation supplemental retirement income or your own personal bank for emergencies 2. Tax-deferred growth no tax due on appreciation of cash values 3. Tax-free access to cash accumulation withdrawals up to basis and loans 4. No mandatory distribution no required minimum distributions (RMDs) at age 70 ½ as with qualified plans 5. Does not create taxation of Social Security benefits unlike RMDs 6. Protection against market loss guaranteed crediting rates on some products 7. Upside growth potential available with Kansas City Life s Compass Elite Indexed Universal Life (IUL), EquiFlex IUL and Variable Universal Life (VUL)* 8. Downside protection available with Kansas City Life s IULs. 9. Protection from creditors and lawsuits level of protection determined by state bankruptcy laws 10. Living benefits from your death benefit available with Kansas City Life s Enhanced Living Benefits (ELB) 2 rider with eligible universal life (UL) or variable universal life (VUL) insurance policies*

5 11. Access to cash at any age permanent life insurance policies 12. No minimum age or income requirement life insurance does have health and financial requirements 13. Continued policy funding if disabled with purchase of Disability Payment of Premium rider 14. Death benefit tax-free income for your heirs 15. Avoids probate death benefit is paid directly to your heirs Summary In today s world of low interest rates and a sometimes volatile stock market, life insurance provides unique options as a savings vehicle for retirement income. A well-funded SIRP can provide you the income you need for a secure retirement. This strategy has been around for decades and is just as real and powerful today as when it was first introduced. If you see the potential and can afford to take advantage of its great benefits, a SIRP may be the answer to your retirement income needs. 2 The ELB rider is not a long-term care, nursing home or health insurance policy. Not available in all states. *Kansas City Life s Century II Variable Product Series is distributed by Sunset Financial Services Inc., a wholly owned subsidiary of Kansas City Life Insurance Company.

6 Life is better here SM You can take comfort in knowing that your coverage is backed by a Company in business since Kansas City Life Insurance Company s reputation is built on integrity, sound investment strategies and honest business practices. We stand behind every promise we make as we have for more than 120 years. You can count on us to be here when you need us now and in the years to come. We ll be with you... We re Kansas City Life. Security Assured. SM 3520 Broadway Kansas City, MO C