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Retirement Planning

Your life insurance portfolio: Using cash-value life insurance as part of a tax-smart retirement plan

While there are a myriad of mediums that can help reduce your taxable income in retirement, it's smart to keep watch on how taxes will affect your income when you retire.

As you plan for retirement, it's a smart idea to keep an eye on how taxes may affect your income when you retire. Many people often overlook cash-value life insurance as part of a tax-smart retirement strategy.

Using cash-value life insurance, such as universal life (UL), can be part of a balanced financial plan by providing family income protection, estate planning, charitable gifting, and a supplemental source of retirement income. It can also provide you with a potential source of tax-free supplemental income at retirement.

Because of its flexibility, cash-value life insurance allows you to take money through withdrawals and loans as needed, providing you access to accumulated cash-value that's tax-free.* However, any loans and withdrawals may permanently reduce the policy's cash values and death benefit. In addition, the death benefit passes directly to your beneficiaries' income tax free, avoiding the potentially costly and time-consuming delays associated with probate. And with proper planning, some or all of the value of your life insurance policy may be excluded from your estate for estate tax purposes.

Having a cash-value life insurance policy as part of your life insurance portfolio can be just one way to help improve your money management when it comes time to retire. But because your goals, objectives, and risk tolerance are different from anybody else, it's important to discuss all of your available options when it comes to retirement and financial planning with a qualified financial professional. Together, you can build a financial plan that's unique to you and your individual needs.

For more information on retirement planning, taxes, and cash-value life insurance, visit the Protective Learning Center.


* Lapsed policies with loan balances and withdrawals that include gains (above cost basis) can create a taxable event.  



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit

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