Folks with IRA, 401(k) and similar plans may be familiar with the term RMD (Required Minimum Distribution):
"The amount that ... qualified plan participants must begin distributing from their retirement accounts by April 1 following the year they reach age 70.5. RMD amounts must then be distributed each subsequent year."
It's not a choice: the law says you have to start using up your retirement savings at age 70½, even if you're still working. Still, one company has come up with a unique way to turn potential lemons into lemonade:
Gleaner Life has developed a product called RMD Life. Basically, it's a single premium, whole life insurance policy with a Guaranteed Purchase Option (GPO) rider. One more often sees GPO's on disability or even Long Term Care insurance policies, where one retains the ability to increase one's protection even if in ill-health.
Every year (beginning at age 70) the GPO allows you to buy an additional amount of life insurance, regardless of your health. Each "certificate" (additional coverage amount) is paid for by the RMD, and can even be assigned to different beneficiaries. And you can even skip a year or two if you find a better use for that year's RMD (but be careful: you have to buy at least once every 3 years to keep the option available).
FoIB Jeff M also helpfully points out that, since this is a single premium plan, any withdrawals from the cash value will be taxable. One presumes that the cash value is of secondary importance to folks interested in this plan, but it's still important to be aware of any potential tax consequences.
Although it's not really clear how much demand there'll be for this product, it's nice to see a carrier think outside-the-bun. And of course, with some 10,000 "Boomers" retiring every day, this could be a pretty decent-sized market.
[Special IB Thanks to Jeff M]
"The amount that ... qualified plan participants must begin distributing from their retirement accounts by April 1 following the year they reach age 70.5. RMD amounts must then be distributed each subsequent year."
It's not a choice: the law says you have to start using up your retirement savings at age 70½, even if you're still working. Still, one company has come up with a unique way to turn potential lemons into lemonade:
Gleaner Life has developed a product called RMD Life. Basically, it's a single premium, whole life insurance policy with a Guaranteed Purchase Option (GPO) rider. One more often sees GPO's on disability or even Long Term Care insurance policies, where one retains the ability to increase one's protection even if in ill-health.
Every year (beginning at age 70) the GPO allows you to buy an additional amount of life insurance, regardless of your health. Each "certificate" (additional coverage amount) is paid for by the RMD, and can even be assigned to different beneficiaries. And you can even skip a year or two if you find a better use for that year's RMD (but be careful: you have to buy at least once every 3 years to keep the option available).
FoIB Jeff M also helpfully points out that, since this is a single premium plan, any withdrawals from the cash value will be taxable. One presumes that the cash value is of secondary importance to folks interested in this plan, but it's still important to be aware of any potential tax consequences.
Although it's not really clear how much demand there'll be for this product, it's nice to see a carrier think outside-the-bun. And of course, with some 10,000 "Boomers" retiring every day, this could be a pretty decent-sized market.
[Special IB Thanks to Jeff M]
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