ING Introduces Life Insurance Option to Make Retirement Planning Easier
A new life insurance option is being introduced to employers as a tool that could make retirement planning a bit simpler. ING Life Companies (ING) announced the new cash-value life insurance policy on Thursday in hopes of gaining employer interest as they look for ways to make retirement more attractive to employees.
ING Introduces S.O.L.A.R. Insurance Arrangements
The product ING has introduced is known as Self-Owned Life and Retirement (S.O.L.A.R.) Insurance Arrangements and is being proposed as a way to recruit and retain key talent by helping employees plan their own retirement income.
The product allows employers to offer a life insurance policy to employees that is funded through employer contributions, after-tax employee contributions or a combination of both. This arrangement, according to ING, could provide retirement savings flexibility to employees without having a negative impact on the employer’s corporate balance sheet.
New Product to Give Employees More Retirement Savings Control
One reason ING says it is offering the new product is because employees have expressed interest in controlling their own retirement options.
To remedy this issue, ING says it is offering a “select loan” feature that allows the policyholder to take out a loan (with a fixed interest rate of 6 percent per year) from the policy that could be used to pay the income taxes owed on the compensation paid by the employer.
The loan would remain in a fixed or indexed strategy elected by the policyholder, allowing the cost of borrowing for taxes to be partially or wholly offset by the amount of interest credited to the account. The employee then would be able to let money grow tax-deferred in the life insurance policy, being able to withdraw it tax-free if they wanted to use it as retirement income.
While the product is just one solution that could aid in providing employee-controlled options for retirement, ING says this solution could solve a number of issues, including simplifying the life insurance/retirement arrangements already in offered by employers as well as increasing financial flexibility for policyholders.