Strategies To Use Life Insurance for Retirement [Video]

Life insurance agents often promote permanent life insurance that accumulates cash value as a way to save for the future. For retirement planning purposes, however, such policies usually make sense only for individuals with a net worth of at least $12.92 million, the threshold (as of 2023, which increases in 2024 to $13.61 million) at which federal estate taxes kick in after death.

For almost everyone else, the best way to incorporate life insurance into retirement planning is to buy a simple term life policy with an adequate death benefit and invest any other disposable income in tax-advantaged retirement accounts.

Except perhaps for the independently wealthy, anyone who has children or other dependents who rely on their income for support needs life insurance. That’s also true for so-called “nonworking” spouses; stay-at-home parents or homemakers, for example.

“For the working spouse, you want to have enough insurance to cover large debts (such as a mortgage), future obligations that …