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Can a Whole Life Insurance Work as an Asset for Your Retirement Planning?

Life is unexpected and it is hard to anticipate events that may change the course of people’s lives. More often than not, unexpected life events cause financial insecurities for survivors in families. This is why a whole life insurance policy is a major component in a person’s financial plan due to the death benefit protection and also for receiving sufficient funding for retirement days. Other than providing income protection for survivors, whole life insurance policy may prove to be a great asset for your retirement planning. 

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In this post, we will talk about the crucial aspects of this type of life insurance in the context of retirement planning.

Three Major Reasons Why Whole Life Insurance Can Be a Part of Retirement Planning

The three major reasons for using whole life insurance as an asset for retirement planning are:


Among the various types of life insurance policies, whole life insurance provides comprehensive financial protection, as there is a guarantee to increase the cash value over the years. This means you need not worry about encountering financial losses due to market fluctuations or modifications or some catastrophic economic scenario. 

In addition, these policies come from reputable, highly capitalized and revenue-generating life insurance companies. These insurance companies come with a history of managing assets judiciously and operating with many oversights that will safeguard your money.


Diversification of assets is a wise way to combat disastrous economic slowdowns. However, most available investments for retirement planning correlate to one another. It means it can be hard to find investment options that do not move in the same direction due to correlation. 

For example, if the stock market shows signs of decline, the bond and real estate market often tend to suffer at the same time. Situations like this put many investors in a fix as they struggle to identify reliable options to save their portfolio. 

In such uncertain economic situations, whole life insurance may absorb the shock due to its excellent features of principle protection. Particularly for retirees, this type of life insurance is crucial as it protects them from extensive losses during market slowdowns.

Read Also: What Are the Settlement Options Available When Claiming Life Insurance Benefits?


Whole life insurance has many tax-favorable features which will expand the net return that you gain on the cash value of this type of policy. It is also possible to get the benefits of various tax-deferred features of a life insurance through a strategic approach, along with other savings and investment options.

How Can Your Whole Life Insurance Help You During Retirement?

Your whole life insurance policy can help you utilize your retirement income in various ways. For example, the policyholder may take out money from his/her insurance in the form of cash withdrawal or loan. Many people show interest in this form of life insurance considering its stability and tax-free income. Besides solving the tax concern, whole life insurance also prevents your social security income from getting taxable. 

In addition, you also need not worry about the economic turmoil affecting your insurance policy. In other types of investments where the cash value dips due to sell-offs or dismal economic situations, your whole life cash balance remains safe. This is why your accumulated income from the whole life policy is quite stable. 

Read Also: How COVID-19 Has Forced Many Americans to Re-Assess Their Retirement Planning

Can You Buy a Whole Life Policy After Your Retirement?

If you intend to get the benefit of cash value as your retirement income from whole life insurance, it will be too late if you buy the insurance after retirement. In this case, you will not get the benefit of cash value that accumulates over a long period. This is why it is better to buy whole life insurance as early as possible. 

Still, there are other methods of using whole life insurance even after your retirement. This can happen when you let the death benefit pass on to your beneficiary after your demise. 

Besides, if you have assets that come under estate taxes, your whole life insurance can get you the required liquidity to pay off those taxes.

Before We Go

If all these lucrative features of a whole life insurance policy are making you think of buying one, it is best to consult a reputable insurance broker who will guide you towards the best possible outcome. 

To get answers to your questions, give us a call at (650) 328-1000 or fill out the online contact form, and we will be happy to help you.  

  • Oct 01, 2020
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