Use Whole Life Insurance to Pay Unexpected Expenses

The economy is in rough shape and showing few signs of recovery.  Add dramatic shifts in retirement landscape, rising health care costs and inflation, and you have a picture of retirement that few Baby Boomers would be tempted to call rosy.

According to the October 2010 National Retirement Risk Index (NRRI), a project of the Center for Retirement Research at Boston College, 51 percent of households are “at risk” of not having enough money to maintain their living standards in retirement.

The NRRI measures the percentage of working-age households that are at risk of being unable to maintain their pre-retirement standard of living in retirement.

Many Americans who are approaching retirement are looking for alternative sources of income to supplement their lifestyles. For many, one potential source is the cash value of their whole life insurance, which can help them cope with unexpected costs.

Whole life insurance is well suited for supplemental retirement planning because the flexibility allows policyholders to address their needs.

Because the policy’s death benefit, premiums and growth of cash value are guaranteed, it’s a part of a financial strategy that a policyholder doesn’t have to worry about.

According to Mass Mutual, cash value guarantees are an important benefit of a whole life insurance policy.

“The death benefit is guaranteed; the premiums are guaranteed, and growth of the cash value is guaranteed. It’s a piece of your financial plan that you don’t have to worry about,” says Tara Reynolds, corporate vice president for Mass Mutual about the NRRI study.

Many consumers use their whole life policies to pay for different needs, such as medical care, providing children or grandchildren with college tuition, or even emergency home repairs.

“Actuaries currently indicate that, if you have two 62-year-old spouses, there is a 50 percent chance one of them will live to age 92,” says Brian H. Ashe, CLU, Treasurer, Life and Health Insurance Foundation for Education.  “The need for permanent life insurance is now more significant than ever before.”

A whole life insurance policy isn’t carte blanche for purchasing non-emergency needs like vacations or products.  But it is an alternative to drawing on retirement accounts.

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