5 Advantages of Combining Annuities and Life Insurance for Retirement – ​​Life Happens

Preparing for your retirement requires careful planning to ensure you get the right benefits after years of hard work. Combining annuities and life insurance can be one way to achieve a comprehensive plan that sets you on the right track for a relaxed retirement.

You can use annuities and life insurance as part of your retirement strategy. This approach offers several benefits, depending on your specific financial situation.

What are annuities and life insurance?

First, let’s look at the two options. With an annuity, you pay a regular premium in exchange for a guaranteed stream of income to cover your living expenses. during your retirement. This could be for a fixed period of time or for the rest of her life; You can choose from different types of annuities to match your financial capacity.

Meanwhile, life insurance helps your loved ones manage financially after your step You pay a premium in exchange for a death benefit. Your beneficiaries will receive cash when you die to cover the expenses they need, such as paying for your funeral, replacing lost income, covering debts and more.

1. Guaranteed Income and Death Benefit

Combining annuities and life insurance can provide you with a reliable source of income during your retirement years, as well as a death benefit for your beneficiaries after you die. You have the option of using a portion of your life insurance policy premiums to purchase an annuity, allowing you to maximize your coverage.

Purchasing what is known as a fixed period annuity offers a similar benefit. This type of annuity provides guaranteed income within a set period, such as 10 years. If you die during that period, your beneficiaries will continue to receive your income until it expires. Compare this to a conventional annuity, which is paid until you die (a uncertain time frame).

It is important to work with a qualified insurance professional to identify the best ways to combine annuities and life insurance.

2. Tax Advantages

Both annuities and life insurance offer tax advantages that help improve your retirement plan.

Annuities offer tax-deferred growth, eliminating the need to pay taxes on your earnings until you withdraw them, reducing your tax liability as your annuity increases in value. Meanwhile, life insurance proceeds are generally free of income taxes for your beneficiaries.

3. Diversification

Bundling your annuity and life insurance diversifies your retirement portfolio. Annuities allow you to forecast and preserve your source of income, while life insurance ensures a possible balloon payment to your beneficiaries.

This diversification helps manage risk and protects your retirement savings from market fluctuations. It further balances your retirement planning and asset management.

4. Estate planning

You can use life insurance as part of your estate planning strategy to transfer your estate to your heirs in a tax efficient manner. Combining annuities and life insurance also provides you with a comprehensive estate plan that covers both lifetime income generation and a legacy to loved ones.

In addition to the smooth transfer of wealth, you can expect the following benefits:

• Improve control over the distribution of assets after death.
• Avoid probate, which makes processing death benefits time consuming and expensive.
• Minimize estate and other taxes that may be owed at the time of your death.
• Use annuity payments to cover ongoing expenses.
• Secure the fair share of the inheritance.

5. Tranquility

In general, both annuities and life insurance promote peace of mind for you and your loved ones. If you want to make sure you won’t run out of money when you retire, annuities can help. And with life insurance, you can be sure that your loved ones will be financially protected when you die.

Having both annuities and life insurance gives you more flexibility and control over your financial assets. More importantly, this approach helps address your costs of care, bills, debt, and other financial expenses.

Retirement should be calm and relaxing – financial certainty is a key part of making sure you can enjoy this period of your life. Working with a qualified insurance professional is the best approach when considering annuities and life insurance. Your insurance professional will explain your options and guide you to a solution that maximizes these advantages. If you don’t already have an agent or advisor, you can search for one in your area with the Life Happens Agent Locator.