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Save for Retirement to Help Ensure Stability Later

Retirement Planning
Elderly retired couple enjoying a good book on the porch

The need to save more money for retirement may seem obvious — particularly to those approaching retirement age — but successful retirement planning should start much earlier than that. Fortunately, there are a variety of options available.

Retirement Plans

The majority of saving for retirement occurs through qualified or non-qualified retirement accounts. According to the most recent Employee Benefit Research Institute (EBRI) Retirement Survey, 82 percent saying they anticipate receiving retirement income from a workplace retirement savings plan, 75 percent from an individual retirement account, and 78 percent from personal retirement savings and investments1.

Outside of work, traditional savings accounts — including CDs, mutual funds, stocks, bonds, and real estate — can also be used to save for retirement. There is no tax deduction when contributions are made, and no contribution limits.

Life Insurance

Additionally, life insurance can be purchased not only for the death benefit protection, but to provide access to cash value when needed during the client's lifetime. Life insurance can be useful to not only save for retirement — with the right structure, a life insurance policy potentially grow retirement income on a tax-deferred basis.

Permanent life insurance — like universal life or indexed universal life — is designed to build money inside the policy (called "cash value.")

  • Universal life insurance pays a set interest rate on any cash value that's built up within the policy. With universal life, there's generally flexibility2 when it comes to premium payments, death benefits and the policy's value. Your accumulated Account Value can then be accessed through policy loans or withdrawals, in many cases without paying any income tax.3 This makes it a potential vehicle for meeting intermediate goals such as education funding or long-term goals such as providing access to cash value when needed during the client's lifetime.
  • Indexed universal life insurance offers all the benefits of universal life, plus the potential for additional growth. Any premium paid above the IUL policy's fees, including to potentially supplement tax-free retirement, charges and expenses (known as the "net premium") builds up as cash value, and can grow through credited interest.

With clear benefits and a wide array of products and structures, life insurance could be a flexible solution to provide access to cash value when needed during the client's lifetime while still providing death benefit protection.


1 RCS Retirement Confidence Survey. 2022 RCS Fact Sheet #2 Expectations about Retirement. Last accessed May 17,2022.
2 There must be enough cash value in the policy to cover monthly charges if a lower premium is paid than the amount selected at issue or if a premium payment is skipped. Additional premium payments may need to be made to keep the policy in force. 
3 Loans will accrue interest. Loans and withdrawals may generate an income tax liability, reduce the account value and the death benefit, and may cause the policy to lapse. Sufficient premium and account value are necessary to cover insurance costs. Loans and withdrawals up to the cost basis are non-taxable provided the policy is not a MEC.

An IUL is a Universal Life policy. It has insurance related costs. Premiums paid must produce sufficient cash value to pay insurance charges. Indexed returns do not protect against lapse if premiums and returns do not provide sufficient cash value to cover loan interest and insurance costs. Your clients must understand that loan risk means loans may well not be zero cost. Such loan risk and interest costs will reduce account value and will contribute to a risk of policy lapse if account value becomes insufficient to cover charges.

The information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) addressed by this material. This material is being provided for informational purposes only. Columbus Life does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. Consult an attorney or tax advisor regarding your specific legal or tax situation. There are insurance related costs to a life insurance policy. Premiums paid must produce sufficient cash value to pay insurance charges.