One valuable life insurance retirement plan benefit is you can use the cash value of a policy to supplement your retirement income and offset any taxable income to stay in a low-to-zero income tax bracket. For many retirees on fixed income, maximizing the amount of money you have can go a long way toward maintaining your standard of living. Reducing your taxable income is one way to do so. Note that LIRP investments—like other retirement funds—are subject to capital gains tax.