Whole Life Insurance
Can whole life insurance be used for retirement?
Whole life insurance can be used as a supplemental retirement savings vehicle. The cash value grows tax-deferred and can be accessed tax-free through policy loans. This strategy is sometimes called infinite banking or bank on yourself. However, whole life insurance should not replace a 401(k) or IRA.
Key Points
- Whole life cash value: grows tax-deferred
- Policy loans: access cash value tax-free
- Infinite banking: using whole life as a personal banking system
- Should not replace 401(k) or IRA: life insurance has higher costs
- An independent agent can help you evaluate whole life insurance for retirement