The financial plan also includes insurance because managing risk by transferring certain financial risks associated with potentially adverse life events to insurance companies can be an important part of helping protect your spouse, your children, your grandchildren, and your extended family.
Today’s insurance has evolved, and new insurance product designs allow life insurance and annuity policies to be used for different purposes and to provide multiple benefits, even in retirement. Permanent life insurance may provide access to cash value that can be used to supplement income* and is designed to provide a tax‑advantaged legacy or death benefit for family members and/or chosen charities. Annuities are designed to provide tax‑advantaged lifetime retirement income. This income can help replace the loss of one Social Security check for a surviving spouse and may also provide access to funds for expensive long‑term care if you or your spouse becomes disabled or needs living assistance.
* If tax-free loans are taken and the policy lapses, a taxable event may occur. Withdrawals (partial surrenders) and loans from life insurance policies classified as modified endowment contracts may be subject to tax at the time the withdrawal or loan is taken and, if taken prior to age 59½, an additional 10% federal tax may apply. Withdrawals and loans reduce the death benefit and cash surrender value. Guarantees subject to the claims-paying ability of the underlying issuer.
