Corporate-Owned Life Insurance Retirement Funding Modeler

Borrowing against a policy's cash value instead of withdrawing it can fund retirement income without triggering tax, provided the loan doesn't quietly outgrow the policy first.

Reading This Tool

How To Use This Calculator

Enter the policy's current cash value, premiums still being paid, and the income you want it to fund in retirement.

A collateral loan against the policy isn't taxable income, since it's a loan, not a withdrawal, but it compounds against the same cash value that's meant to keep growing. This tracks both lines so you can see where they're headed relative to each other, not just today's numbers.

Your Inputs

Current Policy Cash Value $200,000

Annual Premium Still Being Paid $25,000

Years Until Retirement 15 yrs

Expected Cash Value Growth Rate 5.0%

Desired Annual Income From The Policy $60,000

Collateral Loan Interest Rate 6.0%

Years Of Retirement Income Modeled 20 yrs

Premiums are assumed to stop at retirement. In reality some policies require premiums to continue, or use paid-up additions, which changes this projection meaningfully depending on the specific policy design.

Policy Position At The End Of This Projection

Cash Value

Loan Balance

Net Equity Remaining

Cash Value vs. Loan Balance Through Retirement

Cash Value Loan Balance

If the loan balance ever exceeds the policy's cash surrender value, the insurer can require a paydown or lapse the policy, potentially triggering a large taxable gain on the lapse itself. This is the specific risk to watch for, not a reason to avoid the strategy, just a reason to model it before relying on it.

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