Life Insurance Beyond Protection: Building Security and Legacy

Most people think the death benefit is the only reason to own life insurance. It’s an important one, but a well-structured policy can do more. It can be a tax-advantaged savings vehicle, a source of retirement income, a buffer against market downturns and a cornerstone of a legacy plan. Here’s how life insurance can help in three areas: retirement income, estate planning and tax efficiency.

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Retirement income

Life Insurance As A Retirement Income Tool

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Retirement income

Life Insurance As A Retirement Income Tool

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Retirement income

Life Insurance As A Retirement Income Tool

401(k)s and IRAs should be the starting point for any retirement plan. But permanent life insurance with cash value (whole life, universal life or indexed universal life) offers something those accounts don’t: flexible, tax-advantaged income with no required distributions and no IRS contribution limits tied to your employment, although the policy’s own funding limits still apply.

Part of each premium goes into a cash value account that grows tax-deferred. Over time, you can access it through policy loans or withdrawals, often without income tax. With some policies, the cash value can keep growing even while you borrow against it.

401(k)s and IRAs should be the starting point for any retirement plan. But permanent life insurance with cash value (whole life, universal life or indexed universal life) offers something those accounts don’t: flexible, tax-advantaged income with no required distributions and no IRS contribution limits tied to your employment, although the policy’s own funding limits still apply.

Part of each premium goes into a cash value account that grows tax-deferred. Over time, you can access it through policy loans or withdrawals, often without income tax. With some policies, the cash value can keep growing even while you borrow against it.

401(k)s and IRAs should be the starting point for any retirement plan. But permanent life insurance with cash value (whole life, universal life or indexed universal life) offers something those accounts don’t: flexible, tax-advantaged income with no required distributions and no IRS contribution limits tied to your employment, although the policy’s own funding limits still apply.

Part of each premium goes into a cash value account that grows tax-deferred. Over time, you can access it through policy loans or withdrawals, often without income tax. With some policies, the cash value can keep growing even while you borrow against it.

Why It Matters In Retirement

If you’ve already maxed out your 401(k) and IRA, a permanent policy can add another layer of tax-advantaged growth. There are no required minimum distributions, and when the policy is structured correctly and isn’t a modified endowment contract (MEC), loans aren’t taxed as income. Because policy loans don’t raise your adjusted gross income, they also won’t push you into Medicare IRMAA surcharges on Part B and Part D premiums.

Why It Matters In Retirement

If you’ve already maxed out your 401(k) and IRA, a permanent policy can add another layer of tax-advantaged growth. There are no required minimum distributions, and when the policy is structured correctly and isn’t a modified endowment contract (MEC), loans aren’t taxed as income. Because policy loans don’t raise your adjusted gross income, they also won’t push you into Medicare IRMAA surcharges on Part B and Part D premiums.

Why It Matters In Retirement

If you’ve already maxed out your 401(k) and IRA, a permanent policy can add another layer of tax-advantaged growth. There are no required minimum distributions, and when the policy is structured correctly and isn’t a modified endowment contract (MEC), loans aren’t taxed as income. Because policy loans don’t raise your adjusted gross income, they also won’t push you into Medicare IRMAA surcharges on Part B and Part D premiums.

The Buffer Asset Strategy

Withdrawing from your portfolio after it has fallen means selling at a loss and making recovery harder. Instead, you can draw from your policy’s cash value during down markets, let your investments recover, and resume portfolio withdrawals when markets rebound. That simple change in withdrawal order can help your savings last longer.

The Buffer Asset Strategy

Withdrawing from your portfolio after it has fallen means selling at a loss and making recovery harder. Instead, you can draw from your policy’s cash value during down markets, let your investments recover, and resume portfolio withdrawals when markets rebound. That simple change in withdrawal order can help your savings last longer.

The Buffer Asset Strategy

Withdrawing from your portfolio after it has fallen means selling at a loss and making recovery harder. Instead, you can draw from your policy’s cash value during down markets, let your investments recover, and resume portfolio withdrawals when markets rebound. That simple change in withdrawal order can help your savings last longer.

A word of caution

Cash value life insurance is a long-term strategy. It typically takes 10 to 15 years for cash value to overcome early policy costs. It’s a complement to a diversified retirement plan, not a replacement. Policy loans also accrue interest and reduce the death benefit, and if a policy lapses with a loan outstanding, the loan can become taxable.

A word of caution

Cash value life insurance is a long-term strategy. It typically takes 10 to 15 years for cash value to overcome early policy costs. It’s a complement to a diversified retirement plan, not a replacement. Policy loans also accrue interest and reduce the death benefit, and if a policy lapses with a loan outstanding, the loan can become taxable.

A word of caution

Cash value life insurance is a long-term strategy. It typically takes 10 to 15 years for cash value to overcome early policy costs. It’s a complement to a diversified retirement plan, not a replacement. Policy loans also accrue interest and reduce the death benefit, and if a policy lapses with a loan outstanding, the loan can become taxable.

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Estate planning

Life Insurance And Estate Planning

The death benefit generally passes to beneficiaries income-tax free, skips probate, and can arrive exactly when it’s needed most.

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Estate planning

Life Insurance And Estate Planning

The death benefit generally passes to beneficiaries income-tax free, skips probate, and can arrive exactly when it’s needed most.

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Estate planning

Life Insurance And Estate Planning

The death benefit generally passes to beneficiaries income-tax free, skips probate, and can arrive exactly when it’s needed most.

Providing Estate Liquidity

A family may have significant wealth tied up in a home, a business or real estate but little cash. When estate taxes and settlement costs come due, heirs may have to sell at the wrong time. A policy owned by an irrevocable life insurance trust (ILIT) pays the trust instead of the estate, so the proceeds are generally excluded from the taxable estate and can provide cash without adding to the estate tax bill.

For 2026, the federal estate tax exemption is $15 million per person ($30 million for married couples), so federal estate tax isn’t a concern for many families. But state estate and inheritance taxes often apply at much lower levels, and laws change. An ILIT can also control how and when beneficiaries receive money and protect proceeds from creditors.

Providing Estate Liquidity

A family may have significant wealth tied up in a home, a business or real estate but little cash. When estate taxes and settlement costs come due, heirs may have to sell at the wrong time. A policy owned by an irrevocable life insurance trust (ILIT) pays the trust instead of the estate, so the proceeds are generally excluded from the taxable estate and can provide cash without adding to the estate tax bill.

For 2026, the federal estate tax exemption is $15 million per person ($30 million for married couples), so federal estate tax isn’t a concern for many families. But state estate and inheritance taxes often apply at much lower levels, and laws change. An ILIT can also control how and when beneficiaries receive money and protect proceeds from creditors.

Providing Estate Liquidity

A family may have significant wealth tied up in a home, a business or real estate but little cash. When estate taxes and settlement costs come due, heirs may have to sell at the wrong time. A policy owned by an irrevocable life insurance trust (ILIT) pays the trust instead of the estate, so the proceeds are generally excluded from the taxable estate and can provide cash without adding to the estate tax bill.

For 2026, the federal estate tax exemption is $15 million per person ($30 million for married couples), so federal estate tax isn’t a concern for many families. But state estate and inheritance taxes often apply at much lower levels, and laws change. An ILIT can also control how and when beneficiaries receive money and protect proceeds from creditors.

Equalizing inheritances

Fair to every child

If one child works in the family business and another doesn't, a policy can give the second child a comparable inheritance without splitting, selling or borrowing against the business.

Charitable giving

A larger gift

Naming a charity as a beneficiary, or donating a policy outright, can produce a larger gift than a cash donation of the same cost, with potential tax advantages.

Equalizing inheritances

Fair to every child

If one child works in the family business and another doesn't, a policy can give the second child a comparable inheritance without splitting, selling or borrowing against the business.

Charitable giving

A larger gift

Naming a charity as a beneficiary, or donating a policy outright, can produce a larger gift than a cash donation of the same cost, with potential tax advantages.

Equalizing inheritances

Fair to every child

If one child works in the family business and another doesn't, a policy can give the second child a comparable inheritance without splitting, selling or borrowing against the business.

Charitable giving

A larger gift

Naming a charity as a beneficiary, or donating a policy outright, can produce a larger gift than a cash donation of the same cost, with potential tax advantages.

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Tax efficiency

The Tax Advantages Worth Understanding

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Tax efficiency

The Tax Advantages Worth Understanding

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Tax efficiency

The Tax Advantages Worth Understanding

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Tax-deferred growth

Cash value isn't taxed each year the way dividends and gains in a brokerage account are.

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Income-tax-free death benefit

Unlike most inherited retirement accounts, life insurance proceeds generally aren't taxable to beneficiaries.

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Tax-free policy loans

Borrowing against cash value isn't taxable income as long as the policy stays in force.

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No required minimum distributions

You access cash value on your timeline, at any age.

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Estate tax efficiency

Held in an ILIT, proceeds can stay outside your taxable estate.

01

Tax-deferred growth

Cash value isn't taxed each year the way dividends and gains in a brokerage account are.

02

Income-tax-free death benefit

Unlike most inherited retirement accounts, life insurance proceeds generally aren't taxable to beneficiaries.

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Tax-free policy loans

Borrowing against cash value isn't taxable income as long as the policy stays in force.

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No required minimum distributions

You access cash value on your timeline, at any age.

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Estate tax efficiency

Held in an ILIT, proceeds can stay outside your taxable estate.

01

Tax-deferred growth

Cash value isn't taxed each year the way dividends and gains in a brokerage account are.

02

Income-tax-free death benefit

Unlike most inherited retirement accounts, life insurance proceeds generally aren't taxable to beneficiaries.

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Tax-free policy loans

Borrowing against cash value isn't taxable income as long as the policy stays in force.

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No required minimum distributions

You access cash value on your timeline, at any age.

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Estate tax efficiency

Held in an ILIT, proceeds can stay outside your taxable estate.

Keep in mind

Tax treatment depends on how a policy is structured and funded. A policy that becomes a modified endowment contract (MEC), usually from overfunding in a short period, loses some of these advantages, so discuss funding carefully before paying in aggressively.

Keep in mind

Tax treatment depends on how a policy is structured and funded. A policy that becomes a modified endowment contract (MEC), usually from overfunding in a short period, loses some of these advantages, so discuss funding carefully before paying in aggressively.

Keep in mind

Tax treatment depends on how a policy is structured and funded. A policy that becomes a modified endowment contract (MEC), usually from overfunding in a short period, loses some of these advantages, so discuss funding carefully before paying in aggressively.

Your legacy, your terms

See What Your Policy Could Do

For people building wealth, approaching retirement or planning their legacy, life insurance can offer tax-advantaged growth, flexible income, estate liquidity and a legacy on your terms. The right strategy depends on your goals, timeline and overall financial picture.

Your legacy, your terms

See What Your Policy Could Do

For people building wealth, approaching retirement or planning their legacy, life insurance can offer tax-advantaged growth, flexible income, estate liquidity and a legacy on your terms. The right strategy depends on your goals, timeline and overall financial picture.

Your legacy, your terms

See What Your Policy Could Do

For people building wealth, approaching retirement or planning their legacy, life insurance can offer tax-advantaged growth, flexible income, estate liquidity and a legacy on your terms. The right strategy depends on your goals, timeline and overall financial picture.

This material is for informational purposes only and is not intended as a solicitation or as legal, tax, Social Security or investment advice. Consult your tax advisor or attorney for specific advice. Not affiliated with the U.S. Government. Insurance guarantees are backed solely by the financial strength and claims-paying ability of the issuing insurance company.