Life Insurance

If you hold a cash-value life insurance policy (whole life, universal life, and similar), RetireRange can fold it into your plan: its tax-advantaged growth, the income you can draw from it, and the death benefit it leaves behind. This is an advanced, optional feature — most plans don’t need it. (Term life works differently — there’s a section on modeling it below.)

What you can model

For each policy you add:

• Insured person — whose death triggers the death benefit.
• Current cash value — today’s cash value, which grows at the tax-deferred internal growth rate you set.
• Death benefit — the face amount that’s added to your plan when the insured dies. It’s paid into an account you choose — the dropdown lists only Taxable (brokerage) accounts, since a life-insurance payout can’t go into a 401(k) or IRA — so it flows into the surviving household’s balances and legacy.
• Monthly policy loan draw (optional) — a tax-free monthly income stream you borrow against the cash value, over a date range you set. It reduces how much you need to withdraw from your portfolio — and draws the cash value down as it goes.

How it behaves in a simulation

• The cash value grows quietly, tax-deferred.
• If you’ve set a monthly loan draw, that income reduces your portfolio withdrawals during the draw period (the classic "tax-free retirement income" use of permanent life insurance).
• When the insured person dies, the death benefit is added to the designated account. Pair this with mortality modeling to see how it supports the surviving spouse.

Tip: you’ll need a taxable account in the plan for the death benefit to land in.

Modeling term life

RetireRange’s life-insurance inputs are built for permanent policies (whole, universal, IUL) — the kind whose cash value plays a role in retirement. Term life is different, and most of the time it doesn’t need to be in your plan at all: it has no cash value and no living benefit, and it usually expires at or before retirement, so it has nothing to contribute to the drawdown this tool projects. If your term policy will have lapsed by the time you retire, leave it out.

If you do want to model it — say you carry term into early retirement, or you want to test what your spouse would receive if you died while still covered — here’s how, and where the approximation breaks:

• The death benefit. Add a policy with cash value and growth set to zero and the face amount in the death-benefit field. When the insured dies, the survivor receives the payout, tax-free, into your Taxable account. Pair it with what if my spouse dies first? to see how it supports the survivor.
• The catch: there’s no term-expiration date. The model pays the death benefit whenever the insured dies — it doesn’t know your term ends at, say, 65. So this only reflects reality when the death you’re testing falls within the term. If the insured is modeled to outlive the term — the usual outcome for term bought during your working years — don’t include it, or you’ll credit a payout the real policy would never make.
• The premium. There’s no premium field (the feature is built for cash-value policies). If you’ll still be paying term premiums in retirement, fold them into your monthly spending; while you’re still working, treat them as reduced saving.

What it does not model

This is a deliberately simplified feature. RetireRange does not model policy lapse risk, loan interest accruing against the policy, surrender charges, modified-endowment (MEC) tax rules, or the detailed mechanics of a specific contract. Treat the result as a directional estimate of how a policy fits your plan, and lean on your insurer’s illustrations and a professional for the contract specifics. See Limitations.