What is a LIRP? | Life Insurance Retirement Plan

LIRP is really Cash Value Life Insurance and utilizing Indexed Universal Life Insurance.

What LIRP Can do?
1. Tax-free growth (Tax Code Section 7702)
2. Indexed (downside protection)
3. Death Benefit + Long-term Care Benefit

The downside is Fees (1½ %)

If you’re looking for tax-free growth this is a good tool and not touching the money right away, and you’re looking at a death benefit that doubles as a long-term care benefit then maybe this is a tool that you might want to look at.

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Attorney and Financial Advisor Chris Berry of Castle Wealth Group answer questions on retirement and estate planning every Wednesday at 1pm. Register here or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.

Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.

With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.

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A Life Insurance Retirement Plan (LIRP) is a financial product that combines the benefits of both life insurance and a retirement plan. LIRPs have gained popularity in recent years as a way for individuals to secure their financial future while also ensuring protection for their loved ones in the event of their passing.

At its core, a LIRP is a life insurance policy that offers a tax-advantaged way to save for retirement. The policyholder pays premiums into the policy, and a portion of those premiums are used to provide a death benefit for the policyholder’s beneficiaries. However, the remaining portion is invested by the insurance company and grows tax-deferred, similar to a traditional retirement account such as a 401(k) or IRA.

One of the key features of a LIRP is its ability to provide tax-free income during retirement. The policyholder can access the cash value of the policy through withdrawals and policy loans, and because the growth is tax-deferred, the income received is typically tax-free, providing a valuable source of retirement income.

Another significant benefit of a LIRP is its flexibility. Unlike traditional retirement accounts that have contribution limits and strict rules on when funds can be accessed, a LIRP allows for more freedom to contribute and withdraw funds. This can be especially advantageous for individuals who have maxed out other retirement account options and are looking for additional ways to save for retirement.

Additionally, a LIRP can provide a level of protection against market volatility. Since the cash value of the policy is invested by the insurance company, policyholders are shielded from market downturns and can have peace of mind knowing that their retirement savings are not entirely at the mercy of market fluctuations.

It is important to note that LIRPs are not suitable for everyone, and individuals should carefully consider their financial goals and needs before investing in a LIRP. The policy comes with certain fees and costs, and policies can be complex, requiring a thorough understanding of how they work.

In conclusion, a Life Insurance Retirement Plan offers a unique and attractive way to save for retirement while also providing life insurance coverage. Its tax advantages, flexibility, and potential for market protection make it an appealing option for individuals looking to diversify their retirement savings and provide for their loved ones. However, it is essential to consult with a financial advisor to determine if a LIRP is the right choice for your financial situation and retirement goals.