FIGURE 1 be used early in the planning process , such as the utilization of Roth conversion strategies use of Qualified Longevity Annuities within IRAs to defer the distribution of income out of an IRA ( just enhanced by Secure Act 2.0 ).
Life Insurance Benefits The traditional benefits of life insurance are , when you die , you get a tax-free payment to help your heirs survive . Living benefits should be discussed or known more , and they fit nicely into a financial plan .
FIGURE 2
• Retirement Income Planning : The option to annuitize a dependable , long-term income stream . Figures 1 and 2 isolate a strategy of converting some of the life insurance cash values into an income stream for life on a joint basis for both husband and wife . A benefit of converting to a stable income source as a complement to Social Security is reducing the impact of sequencing risk . The green in Figure 2 illustrates roughly two-thirds of income needs fulfilled by fixed income instruments , Social Security and a life insurance policy converted to a fixed income annuity . Other strategies can
1 . Declining Health . If individuals develop a health issue and total disability occurs , the life insurance simple term insurance policies ( if structured correctly ) can be converted at no charge to the insured . I have seen cash balances approach $ 1 million over the years on a simple , low-cost term insurance policy . How ? The term policy converts to a whole-life policy at total disability .
2 . Stability When Markets Are Not . Accumulations of the cash value in life insurance policies can add peace of mind when retirement portfolios are experiencing the necessary recalibration from time to time . While the diversification strategies of investments is a different topic , there are many examples of challenged markets . For example , the S & P 500 dropped by 45 percent and the Nasdaq fell by nearly 80 percent during 2000-02 ; in 2008-10 , the S & P 500 dropped by about 58 percent and international markets even more ; and in 1973-74 , the S & P 500 fell by about 45 percent . The cash values in traditional whole life insurance remained steady and rising .
3 . Tax-free 1035 Exchanges to Pay for Long-term Care Insurance . Many www . calcpa . org JUNE 2023 CALIFORNIA CPA 15