Why Millennials and Gen Z Should Use Life Insurance to Build Wealth and Secure Their Retirement

Most people think of life insurance as a way to protect their family in case something happens to them. While that’s true, life insurance—especially cash value life insurance—can also be a powerful wealth-building tool that offers tax advantages, financial flexibility, and protection against future uncertainties.

For those in their 20s and 30s, integrating life insurance into your financial plan can provide unique benefits that traditional retirement accounts can’t match.

How Life Insurance Compares to Traditional Retirement Accounts

Many people rely on 401(k)s, IRAs, Roth IRAs, or SEP IRAs to save for retirement. While these accounts offer tax benefits, they also come with limitations:

• 401(k) and Traditional IRA

  • Contributions are tax-deductible.

  • Growth is tax-deferred, but withdrawals are taxed as income.

  • Withdrawals are restricted until age 59½—otherwise, you pay a 10% penalty.

  • Required Minimum Distributions (RMDs) begin at age 72, forcing you to take taxable withdrawals.

• Roth IRA

  • Contributions are made with after-tax dollars.

  • Growth and withdrawals are tax-free if taken after 59½.

  • Contributions (but not earnings) can be withdrawn anytime.

  • Income limits restrict eligibility.

• SEP IRA (For self-employed individuals and business owners)

  • Works like a Traditional IRA but with higher contribution limits.

  • Withdrawals before 59½ incur a 10% penalty.

• Index Universal Life Insurance

  • Contributions are made with after-tax dollars.

  • Growth is tax-deferred, and policy loans allow tax-free access to funds at any time.

  • No age restrictions on withdrawals.

  • No RMDs—you decide when and how much to take out.

  • Protected from creditors and lawsuits in many states.

Unlike retirement accounts, index universal life insurance offers complete flexibility, tax efficiency, and financial security without restrictions on when you can access your money.

Why Starting in Your 20s and 30s Is a Game-Changer

Many people wait until their 40s or 50s to consider life insurance, but doing so earlier provides significant advantages:

• Lower Premiums & Greater Growth Potential

  • Life insurance premiums are based on age and health. The younger and healthier you are, the cheaper your premiums will be.

  • Starting early gives your cash value more time to compound, creating more financial flexibility in the future.

• Protection Against Uncertainty

  • As you age, you may develop chronic health conditions that make it harder (or impossible) to get insured.

  • Locking in coverage now ensures you’re protected for life.

• Asset Protection from Creditors

  • Unlike traditional retirement accounts, life insurance cash value is protected from creditors and lawsuits in many states.

  • If you ever face financial hardship, this can be a lifesaver.

How Business Owners Can Use a Defined Benefit Plan to Fund Life Insurance

For high-income earners and business owners, a Defined Benefit (DB) Plan is a tax-efficient way to fund a life insurance policy while lowering your tax burden.

• Contributions are tax-deductible, reducing taxable income.

• Cash value grows tax-deferred, like a retirement account.

• Retirement distributions can be structured tax-free through policy loans.

• No RMDs—unlike a 401(k) or IRA, you aren’t forced to withdraw taxable income at age 72.

Since taxes are expected to rise in the future, this strategy helps ensure more of your money stays in your pocket when you retire.

How the Wealthy Use Life Insurance to Build Financial Empires

Many successful entrepreneurs and business leaders have leveraged life insurance to build wealth, fund their businesses, and survive financial downturns.

• Walt Disney – Borrowed from his life insurance policy to help finance Disneyland after banks refused him loans.

• J.C. Penney – Used life insurance cash value to keep his company afloat and pay employees during the Great Depression.

• Ray Kroc (McDonald's) – Tapped into his life insurance policy to expand McDonald’s when he struggled to secure financing.

If some of the most successful business leaders in history have used life insurance as a financial tool, why shouldn’t you?

Final Thoughts: Life Insurance Is More Than Just Protection—It’s a Smart Wealth Strategy

By starting early and structuring your policy correctly, you can:

✔ Build tax-free retirement income without restrictions.
✔ Access cash anytime, unlike a 401(k) or IRA.
✔ Protect your assets from creditors and rising taxes.
✔ Ensure long-term financial security for yourself and your loved ones.

The best time to start? Now—while you’re young, healthy, and in the best position to take advantage of these financial benefits.