You may have heard of a Roth IRA as a good option for retirement planning with favorable tax treatment that allows after-tax contributions, tax-deferred growth, and tax-free distributions at retirement. The drawback? A Roth IRA is not available for everyone and has limits to how much you can contribute.
You may get features similar to a Roth IRA (along with additional benefits) from another vehicle: whole life insurance.
Take a closer look at how whole life can differ from a Roth IRA:
Eligibility
Whole life doesn’t have the income limitations like a Roth IRA. A married couple filing jointly with income of $193,000 or above can’t directly contribute to a Roth IRA.*
Contributions
Roth IRA annual contribution limits are $5,500 (under age 50) and $6,500 (over age 50). Life insurance policies can be structured to accept much more than $6,500 in annual premiums, which can help if you’re trying to catch up and build savings before you retire.
Volatility
Roth IRA contributions may be subject to market risk depending on the investment options you selected. If the markets are down, your Roth IRA values could go down, too. Whole life has guaranteed cash values not subject to market volatility.
Protection
Life insurance provides a tax-free death benefit many times the size of the annual premium. This important feature provides financial assistance during a difficult time for your family and may provide additional funds to assist with the dreams you have for them.
Distributions
There are restrictions on when and how you can get earnings out of a Roth IRA. With whole life cash value, you can access your policy values when you need them, without penalty.
Cosmo Insurance Agency is knowledgeable in various options including but not limited to – term, ROP, permanent and whole – from over two dozen A rated carriers. We are familiar with the rate classifications that particular carriers use to determine the health class of enrollees – and there are significant differences between them. No matter what the results of your medical examination are, we will find the insurer that will provide you will the best rating class and thus the lowest premiums.
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