Simplify Spotlight: The Value of Whole Life Insurance
The Value of Whole Life Insurance in Your Overall Financial Strategy client presentation is now available through Simplify, a powerful, case design presentation tool brought to you by MassMutual Strategic Distributors (MMSD) Advanced Sales.
MassMutual whole life insurance is a versatile financial asset that can play an important role in long-term protection and accumulation strategies. Including whole life insurance may add an element of diversity to a client’s overall financial strategy by helping reduce financial risk.
Consider the following:
- Tax-efficient Savings with Bonds1. A client is maximizing contributions to a qualified retirement plan to look for tax-efficient ways to supplement their long-term accumulation strategy, and is considering a bond fund.
For example, they are planning on contributing $50,000 of annual after-tax income to a bond fund, currently earning 3.50%, net of annual taxes and expense charges, which is assumed to be reinvested into the fund.
- An Integrated Approach. However, if additional life insurance is currently needed to protect the family, a portion of the savings can be allocated to a MassMutual Whole Life 65 policy. Therefore, in this example, $25,000 of the $50,000 can be allocated to the purchase of the policy.
This integrated strategy reflects how two financial products may effectively address the protection and accumulation goals of clients while working and saving for retirement. In addition to life insurance coverage during their working years, it offers tax-advantaged income2 from both the bond fund and the whole life policy which helps to diversify taxes at retirement.
As a reminder, you now have direct access to Simplify. Access the website today and easily download the desktop app.
1 The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.
2 Distributions under the policy (including cash dividends and partial/full surrenders) are not subject to taxation up to the amount paid into the policy (cost basis). If the policy is a Modified Endowment Contract, policy loans and/or distributions are taxable to the extent of gain and are subject to a 10 percent tax penalty if the policyowner is under age 59½. Access to cash values through borrowing or partial surrenders will reduce the policy’s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured. Life insurance proceeds are generally excluded from the beneficiary’s gross income for income tax purposes. There have been a few exceptions such as when a life insurance policy has been transferred for valuable consideration.