Life Insurance and Retirement: Illustrating the Time Value of Money
When most people think of life insurance, they think of financial protection for their loved ones. While that’s an important part of what life insurance provides, some policies can also play a role in supporting your retirement strategy.
One of the most powerful financial concepts at play is the time value of money—the idea that a dollar today has more potential value than that same dollar in the future, thanks to growth over time. By starting early, you can help maximize your financial opportunities later in life.
A Flexible Option for Retirement Planning
Farmers Index Universal Life® (FIUL) from Farmers New World Life Insurance Company can help you plan for both the expected and unexpected. This type of life insurance not only provides a death benefit to help protect your loved ones but can also accumulate cash value over time—giving you flexibility for future needs such as retirement income.
A Hypothetical Example: The Power of Starting Early
The chart below shows a hypothetical scenario illustrating how paying a monthly premium toward an FIUL policy can grow over time. This example solves for 20 years of policy distributions starting at age 65 or 70.
| Age | Monthly Premium | Total Premiums Paid at Age 65 | Annual Distributions at Age 65 | Total Distributions (20 years) | Annual Distributions at Age 70 | Total Distributions (20 years) |
|---|---|---|---|---|---|---|
| 25 | $250 / $500 / $1,000 | $120,000 / $240,000 / $480,000 | $36,904 / $76,446 / $155,520 | $738,080 / $1,528,920 / $3,110,400 | $51,544 / $106,706 / $217,092 | $1,030,880 / $2,134,120 / $4,341,840 |
| 30 | $250 / $500 / $1,000 | $105,000 / $210,000 / $420,000 | $25,646 / $53,176 / $108,303 | $512,920 / $1,063,340 / $2,166,060 | $35,758 / $74,155 / $151,065 | $715,160 / $1,483,100 / $3,021,300 |
| 35 | $250 / $500 / $1,000 | $90,000 / $180,000 / $360,000 | $17,430 / $36,166 / $73,777 | $348,600 / $723,320 / $1,475,540 | $24,231 / $50,330 / $102,621 | $484,620 / $1,006,600 / $2,052,420 |
| 40 | $250 / $500 / $1,000 | $75,000 / $150,000 / $300,000 | $11,614 / $24,222 / $49,424 | $232,280 / $484,440 / $988,480 | $16,076 / $33,536 / $68,498 | $321,520 / $670,720 / $1,369,960 |
| 45 | $250 / $500 / $1,000 | $60,000 / $120,000 / $240,000 | $7,291 / $15,517 / $31,733 | $145,820 / $310,340 / $634,660 | $9,991 / $21,355 / $43,683 | $199,820 / $427,100 / $873,660 |
This example is hypothetical and for illustrative purposes only. Actual results will vary based on your individual circumstances, policy details, and market conditions.
As shown above, the earlier you start, the more potential your policy may have to provide supplemental retirement income. This is the time value of money at work—early contributions have more time to grow.
Living in the Moment—While Planning for Tomorrow
Building a strong retirement strategy doesn’t mean putting your life on hold. Life insurance can give you the flexibility to live confidently today while still preparing for your future.
If you’re interested in learning more about how Farmers Index Universal Life Insurance might fit into your financial strategy, reach out to your local Farmers Insurance agent today.
Important Information and Disclosures
- Premiums are subject to change. Issuance of a policy and premiums are subject to underwriting guidelines and approval.
- The cost to keep your policy in force will increase over time. This policy may lapse if you do not pay enough premiums to continue coverage.
- Benefits and values are not guaranteed. Assumptions on which they are based are subject to change by the insurer, and actual results may be more or less favorable.
- Cash values may be accessible through policy loans or partial surrenders. Policy loans that are not repaid and partial surrenders will reduce cash surrender value and death benefit. Policy loans are subject to interest charges. If your policy is a modified endowment contract, loans and surrenders may incur taxes and penalties.
Policy form #ICC22-FIUL or applicable state variation.
Life insurance issued by Farmers New World Life Insurance Company, 3120 139th Ave. SE, Ste. 300, Bellevue, WA 98005. Products and features may not be available in all states and may vary by state. Restrictions, exclusions, limits, and conditions apply. Any product guarantees are subject to the financial strength and claims-paying ability of Farmers New World Life Insurance Company, which is solely responsible for its obligations. Farmers New World Life Insurance Company is not licensed and does not solicit or sell in the state of New York.
