Financial security, permanent protection & tax-free cash
Saving more money for retirement is something everyone wants to do.
401(k)s, IRAs, and other qualified plans offer the ability to do so, but for those who are worried about taxes rising in the future, the idea of having to pay taxes upon accessing their retirement accounts is troublesome.
Tax-free retirement accounts, also known as TFRAs, use permanent life insurance that is designed to provide tax-free income for retirement. These cash value life insurance plans are covered under Section 7702 of the Internal Revenue Code, which allows policyholders to fund the plans with after-tax money, grow their cash value in a tax-deferred manner, and eventually access those funds in retirement using participating loans to create a tax-free income stream in retirement.
Indexed Universal Life insurance (IUL) is the type of life insurance most commonly used to design a tax-free retirement policy, though whole life insurance is sometimes used as well.
The goal of a properly-designed tax-free retirement plan is, of course, to generate tax-free income to be used in retirement. However, participants enjoy a variety of other benefits throughout the life of these plans as well, including: