A LIRP is a Life Insurance Retirement Plan, and although this is not for everyone, listen to Troy Sharpe, CFP®, as he explains what a LIRP is and whether or not it’s a viable strategy for you to think about when planning for retirement.

Life insurance as a tool in your estate plan or your retirement plan may have many distinct advantages, depending on your circumstances. Along with annuities and bonds, we believe life insurance to be one of the most misunderstood tools in the financial world.

In our view, life insurance in retirement should be thought of as an asset, not an expense. When structured properly and used as part of a plan, it can become a conservative growth tool with unique tax advantages that provide living benefits and death benefits.

The tax code specifically carves out special advantages and tax benefits for life insurance. When used appropriately in retirement, or as part of an estate plan, it may be possible to use life insurance to help protect your retirement, and your estate.

The benefits of life insurance must be weighed against the costs and your objectives. We believe that no financial tool is inherently good or bad, but they do have different purposes, benefits, pros and cons. Understanding the purpose, benefits, pros and cons of life insurance as applied to your personal situation is the first step in determining if life insurance can be an appropriate tool for you.

Troy Sharpe, CFP® is the president of Oak Harvest Financial Group, a local family-owned financial services firm.

Troy leads a team of experienced professionals, analysts, and support staff to help clients create customized financial strategies that align with their unique retirement goals.

Troy holds a Series 65 license as well as a Texas life insurance license. He also earned a finance degree from Florida State University and completed his Certified Financial Planning certification at the Susanne M. Glasscock School of Continuing Studies at Rice University. Additionally, Troy is a Registered Financial Consultant with the International Association of Registered Financial Consultants.

You can hear Troy at 12 p.m. Sundays on KTRH 740AM when he hosts “The Retirement Income Show.”

Do you have a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at (877) 404-0177

If you have $500K or more and would like a partnership with a firm to help you manage your investments and financial plan as in these videos, click on this link to connect with our advisors:

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What is a LIRP (Life Insurance Retirement Plan)?

Life Insurance Retirement Plans, or LIRPs, have become quite popular recently as a way to save for retirement while also having the benefits of life insurance protection. A LIRP is a unique financial product that combines the features of a life insurance policy with an investment component. It is essentially a strategy that allows individuals to accumulate tax-free retirement savings by leveraging the benefits of life insurance.

In a LIRP, the individual pays premiums into a cash value life insurance policy. These premiums are invested and grow over time, accumulating cash value. This cash value can then be accessed tax-free during retirement to supplement other sources of income. The policy also provides a death benefit which is paid out to beneficiaries upon the individual’s death.

One of the key advantages of a LIRP is the tax treatment it offers. Unlike many other retirement savings options, withdrawals from a LIRP are typically tax-free, as long as certain conditions are met. This can be especially advantageous for high-income earners who may be subject to higher tax rates in retirement.

Another benefit of a LIRP is that it offers a death benefit to protect loved ones. If the individual passes away before retirement, their beneficiaries will receive a tax-free payout. This can help provide financial security and peace of mind to family members.

LIRPs also offer the flexibility to adjust premium payments and death benefit amounts, making them adaptable to changing financial circumstances. Additionally, the cash value of a LIRP can be accessed in times of financial need through policy loans or withdrawals, although it’s important to note that these may impact the policy’s death benefit.

Critics of LIRPs argue that these plans can be complex and may come with high fees and commissions associated with the life insurance part of the policy. It is important for individuals considering a LIRP to fully understand the terms and conditions and work with a knowledgeable financial advisor.

Overall, a LIRP can be a valuable tool for individuals looking for a tax-efficient way to save for retirement while also ensuring financial protection for their loved ones. It combines the benefits of life insurance with the potential for tax-free growth and distributions, providing a comprehensive strategy for long-term financial planning.