Life insurance has many advantage for the policyholders, such as guaranteed cash value, tax deferred growth, tax-free death benefit, and tax-free access to the cash. Some people say that life insurance is not a good investment because its high premium and low cash return. The others say life insurance is a smart investment depends on their own goals.

Life insurance could be use as a strategy to maximize your pension income. When you receive pension, you will offered a different options, like single-life option and joint-life option. The single-life option gives you the highest monthly income, but there will be no income for your spouse when you die. Meanwhile, the joint-life option will give an income to your spouse, but your monthly payout will be reduced. For example, your single-life payout is $5,000 per month at age 65 and your joint-life option is $4,000 per month, you should choose the higher single-life option. Then apply the $1,000 monthly difference to a life insurance policy. The death benefit will have to be big enough to replace the lower payout option ($4,000 per month). Death benefit proceeds are tax-free, so your spouse will benefit form higher after-tax income.

If you want to use pension maximization strategy, you need to consider several factors. Age, projected life expectancy, health, and tax bracket are the several samples of factor you should consider. It will be really complicated to calculate the strategy on your own, therefore you need qualified life insurance professional assistance. 

In case of the estate taxes, you can use life insurance as capital to pay estate settlement cost. You might need to work with estate planning attorney who will make the arrangement. To own life insurance, you might need to create irrevocable life insurance trust. It will removes the value of life insurance from the estate so it is not included for tax purposes. 

If someone has individual retirement asset, you can turn it into a tax-advantaged legacy by taking distributions and use them to purchase a life insurance policy. You need to pay taxes on the distribution. Upon the death, the beneficiaries will receive tax-free income from death benefit and the remaining balance of the individual retirement asset.