Insights: Article

Is Your Retirement Plan on Track?

September 11, 2018

✔ 401k


✔ Savings

✔ Life Insurance

“Life insurance? What does life insurance have to do with retirement readiness?”

Most people don’t think of life insurance as a retirement tool, but it’s important to consider what will happen to your family’s retirement plan if you die prematurely. Can your spouse still retire without the benefits your income would have provided? Life insurance can replace the income you would have earned and the savings you would have contributed throughout the remainder of your working life.

If you are a business owner, life insurance can provide your partners funds they can use to pay your spouse for your share, which can free up your partners to keep operating. Alternatively, life insurance could provide your family with a lump sum that would give them time to sell the business and replace the income lost due to your death.

Obviously, the first step in this plan is to purchase the life insurance. But even once you have a policy in place, it is imperative that you make sure the policy is owned by the right person or entity. It is also vital to review a cash value policy periodically to ensure it will provide the benefits you need.

Benefits of a Policy Review:

  • Policies that are older may not have enough cash value to keep the policy in force until an assumed age of death. This can be a shocking discovery if you are decades into a policy and you find out that the policy might terminate. You might discover that you must increase your premiums substantially to retain the policy.
  • Policies that are not owned by the appropriate person or entity can cost your family money. If the policy is within your estate, it may be subject to estate tax depending on your net worth. If the policy has an inappropriate owner and beneficiary, it may be subject to income tax.
  • Policies may have beneficiaries that are no longer alive or part of the family. Imagine how your current spouse would react if your life insurance went to an ex-spouse! Wills do not govern the beneficiary of a policy.
  • You may discover that your policy has a loan against it. This can happen when you borrowed the funds for some other purpose. It can also occur if you have not made enough premium payments to keep the policy in force. A loan that is not set up properly has the potential to implode a policy, and can create an income tax event for you.

At Eide Bailly, we review policies for our clients to help prevent these and other issues from ruining your plan. This is a complimentary service, and well worth the time. We have found a wide variety of issues with policies that we’ve reviewed, and we understand their impacts. Let us help you find the solutions that are most appropriate for your family. For more information or to have your life insurance policies reviewed, reach out to your CPA or Eide Bailly advisor, and gain confidence in knowing your policy is functioning as you intended.

Financial Advisor offers Investment Advisory Services through Eide Bailly Advisors LLC, a Registered Investment Advisor. Securities offered through United Planners Financial Services, Member of FINRA and SIPC. Eide Bailly Financial Services, LLC is the holding company for Eide Bailly Advisors, LLC and Eide Bailly Agency, LLC. Eide Bailly Financial Services and its subsidiaries are not affiliated with United Planners. Insurance products are issued or offered via Eide Bailly Agency, LLC. Eide Bailly Advisors may also be licensed as insurance agents/producers of Eide Bailly Agency. ot all products are available in all states.

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