Tax Diversification E-Book

You diversify your assets…why not your income? In the investment world, diversification is a practice that reduces overall market risk by distributing assets into multiple categories. It works much the same with retirement income, only in this case diversification reduces the risk taxes may pose to your lifestyle. Whole life insurance: a tax-efficient source of retirement income. While the purpose of whole life insurance is to give your family financial protection in case you pass away, the cash value it generates can be accessed to provide supplemental income in retirement. Best of all if the policy is structured properly this income can be tax free, making it one source of tax-free income to consider. 1,2

Diversifying your future income sources may provide more income to use during retirement. Below is a general example of how that diversification may look.

Tax-free income

Income subject to tax

Income subject to tax

Without tax diversification

With tax diversification

1 The primary purpose of life insurance is to provide a life insurance benefit. You can access cash value via loans or withdrawals through surrenders. When accessing cash value via loans, the total outstanding loan balance (which includes accrued loan interest) reduces your policy’s available cash surrender value and life insurance benefit. The amount you borrow will accrue interest daily. When taking a withdrawal through surrenders, you are surrendering any available paid-up additional insurance for its cash surrender value. This means that your policy's cash value, available cash surrender value, and death benefit will be reduced by the amount of the withdrawal. Policy values are in part based on non-guaranteed factors, such as dividends and interest rates, which are subject to change. Therefore, the supplemental retirement income is not guaranteed. 2 Please refer to the back page for this footnote reference.

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