Create Tax-Advantaged Retirement IncomeYou Can’t Outlive

Protect your assets from the tax

man and set up an income plan

that ensures you’ll never run

out of money – no matter how

long you live.

Insurance Companies Don’t Just Sell Insurance

• Enjoy the higher yields of a variety of stock

market investments along with tax-free or tax-

deferred gains.

• These perks can all be found within venues that

carry the added security of guaranteed death

benefits or income for life – benefits that are

lacking in traditional retirement plans.

Life Insurance Investing

Let’s take a look at the various

types

of permanent life insurance

policies for different investment

goals→

Which Insurance Type is Right for You? It Depends on Your Investment Goals

Whole

Life A portion pays

for life insurance.The rest builds cash value.Each month, the company pays you a fixed interest rate. The premium stays the same over the life of the policy.

Univ

ers

al Li

feThe interest rate paid is based on changing market rates. Riskier than whole life.Flexible—you can change the amount you pay monthly. V

ari

ab

le L

ife Similar to

combining a brokerage account with your life insurance.Buy stocks, bonds, and other investments within the policy.Riskiest option.

Guarantees

All of these policies have a death

benefit, which is guaranteed to a

point.

Whole Life Guarantees

Since both the death benefit and the cash value are guaranteed, you’ll know from the quote what the

contract will provide.

The insurance company can tell you, “If you put X dollars in monthly, you’ll have $300,000 at age 65.”

There is a set, guaranteed death benefit.

The rate of return is also guaranteed so you’ll know what you’ll get when you retire.

Universal Life Guarantees

The insurance company will estimate a range of dollars you could have by a certain age.

Your actual amount could be more or less than the company’s estimate.

The interest rate will change over time.

This fluctuation is due to the market.

Universal Life Guarantees

Variable Life GuaranteesThe company will make an estimate based on

market trends.

How much you accumulate depends on how well you invest your money.

Typically, there are no guarantees to variable life insurance.

Investing in variable life insurance is like investing in the stock market.

Variable Life Guarantees

Tax Strategy—How to Get Tax-Free Gains

• Avoid Cancelling Your Policy:

• The money in your life insurance

account grows tax-deferred. As

long as you leave money in the

account, you don’t owe taxes on

it.

• If you decide to cancel your life

insurance policy and cash out

investment gains, you’ll owe taxes

on those gains. So avoid

cancelling your policy!

• Follow this process instead:

• Get a policy loan. Luckily, the

government doesn’t tax loans.

• Let the death benefit pay off

your loan. The government

doesn’t tax life insurance death

benefits.

If you use a life insurance policy as a tax-free investment, consider the downsides:

• You’ll have to be

healthy enough to

qualify for life

insurance. It might not

be an option if you have

serious health issues.

There’s a required

medical exam.

• Your investment gains

will be lower than if you

had just invested in a

stock account, because

each month a little bit of

your money goes

towards paying for your

life insurance.

How Can Life Insurance Investing Be Beneficial?

It’s especially advantageous if you can’t qualify for a regular retirement plan:

– For example, if you’re making too much money, you’re not allowed to use an IRA, so you could use life insurance.

– If you don’t have a 401(k) at work, life insurance would be a great tax-free investment for you.

– Life insurance doesn’t have any income restrictions, so anyone can set up a plan like this as long as they’re fairly healthy.

More Benefits ofInvesting in Life Insurance

• If you want life insurance to protect your family, it’s an added benefit to be able to save for tax-free income later on all within the same contract.

• If you struggle to invest regularly, permanent life insurance offers automatic, forced savings, ensuring that you provide for your future, even when you’re not thinking about it.

Annuity Investing

• Annuities are investment contracts split

into two stages:

1. Accumulation phase: when you put in

your money monthly and it builds over

the years.

2. Payout phase: when you begin to receive

the money.

Risks of

Fixed rate of return.

You know exactly what you’ll receive.

Lower risk, but you’ll earn less money.

Variable rate of return.

Interest payments depend on the market

No guarantees of the amount you’ll accumulate.

Fixed Variable Annuitiesvs.

Top Benefit of an Annuity that Life Insurance Doesn’t

Offer

An annuity offers guaranteed

income for the rest of your life.

Illustration of Annuity Payout

• If you have $300,000 in your annuity and you’re ready

to start the payout phase, you can choose to receive

set, guaranteed payments for the rest of your life, and

they’ll turn it into a lifetime pension for you.

• No matter how long you live, you’ll continue to receive

the payments. The amount of the payments will never

go down, even if your total payments surpass that

$300,000.

Life Insurance or Annuity:Which is Right for You?

Life Insurance• If you have children or need a life insurance policy

• If you want to retire early (you can take out a loan without restrictions)

Annuity• If your goal is to reach

retirement with the most money

• If you don’t qualify for life insurance

• If you’re single, have no kids, and don’t need life insurance

4 Tax-Free & Tax-Deferred Income Strategies

Now that you understand the basics of investing in

life insurance and annuities, let’s review 4 specific

strategies to achieve tax-advantaged income.

Strategy #1. Use Life Insurance Cash Value for Tax-Free Income

If you only used your life insurance cash value to fund your retirement, all your

income in retirement would be tax-free.

As long as you keep your insurance policy

in force, you can borrow money from it

tax-free. You could borrow money yearly.

Then, when you eventually die, the death benefit from

your policy will pay off your loans so nobody else has to pay them.

Strategy #2. Use an Annuity to Guarantee Income for Life

You can ask the company to turn your annuity into

guaranteed payments for the rest of your life.

So, no matter how long you live, you’ll receive the same amount of money per month. If you live to 120, you know you’re still

going to be collecting checks.

Remember, the main benefit of an

annuity is guaranteed

income.

Strategy #3. 1035 Exchange: Life Insurance Cash Value

into an Annuity

With a 1035 exchange, you

can turn your life insurance into an

annuity.

This transaction is not a withdrawal, so you won’t owe

taxes.

Then, you can set up your

guaranteed payments for retirement.

Strategy #4. Use an Annuity + Life Insurance

If he dies last, he continues to receive those

higher payments.

If you’re married, base the annuity on one partner to

receive higher payments. For example, the

husband.

Have life insurance on the same

partner. If he dies first, the wife gets tax free income

from the life insurance.

Younger vs. Older Strategies

30s or 40s: Buy life insurance now. You’ll

likely be healthy enough to qualify for an affordable rate.

60s or 70s: You might not be able to

qualify at all.

You can get the annuity at any time, but if you get it when you’re young and add

funds to it on a regular basis, you

have the advantage of letting your money work for you for many years of tax-deferred

growth.

Comparing Tax Advantages of the 4 Strategies

• #1 is the only strategy that’s completely tax-free (life

insurance).

• #2, #3, and #4 delay taxes until retirement, which

gives your investment more momentum to grow.

• With #4 (life insurance + annuity), you’ll pay less

tax, because the life insurance death benefit will be

tax-free.

How Can You Get Started?

Discuss your desires

for retirement.

Meet with a life

insurance agent.

Get at least 3 quotes

from different agents.

Choose a company with A+

ratings from the A.M.

Best Company.

Setting up an annuity with guaranteed income is really the only way for most people to get income for the rest of their life.

The question isn't at what age I want to

retire, it's at what income.

~George Foreman

We hope you enjoyed your Special Report!

Curtis Roese is an experienced professional with extensive experience in personal finance and small business matters. Curtis writes and publishes articles, courses, guides and special reports on his personal finance blog.

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