The Indexed Universal
Life Insurance Policy
The Indexed Universal Life insurance policy (or IUL) is a novel permanent type of life insurance policy that allows cash to accumulate within the policy. However, unlike other permanent life insurance policies, the growth of these funds harnesses the Power of Indexing, allowing the funds to grow with the market with complete protection from any market downturns.
In addition to leveraging this indexing strategy, these policies have other core benefits that give more flexibility and added protection to your finances.
The Other Benefits of an IUL
Although the Power of Indexing sets the IUL apart from most other financial vehicles, there are other strengths of these policies that can make them an indispensable part of your retirement portfolio.
Liquidity
As noted previously, cash value can accumulate and grow within an IUL. This cash can be accessed via policy loans. In many cases, the funds requests can be transferred in as little as a few business days. Although these loans can be paid back, this is not a requirement and is ideal is certain situations (i.e. receiving supplemental income in retirement).
One of the best aspects of these policy loans is that they can taken at any time and for any reason. This makes the IUL incredibly versatile for uses such as growing business capital, funding large purchases (becoming your own bank), or saving for college/education as an alternative to a 529 plan. It also allows you the ability to retire early without the penalties seen with traditional retirement plans such as the 401(k), 403(b) and the IRA.
Living Benefits
Essentially all IUL policies come with what is known as living benefits. In contrast to the death benefit, which is paid out to the insured's beneficiary at the time of death, living benefits allow the insured to access their policy's death benefit while they are still alive in certain situations.
If the insured undertakes a critical illness/injury (stroke, heart attack, disability, etc), terminal illness (i.e. cancer) or a chronic illness requiring long term care, they are entitled activate their living benefits to cover any resulting costs (medical bills, loss of income, etc).
The most significant of these may be the living benefit for chronic illness. The cost of long-term care is one of the leading causes of outliving retirement funds. Although 60% of Americans will need long-term care in their lifetime, the cost of long-term care insurance in retirement years is very expensive, even prohibitive. And if it is never needed, paying these premiums for decades would have needlessly eaten away at precious retirement savings. With this IUL benefit, you can be protected from this significant risk at no additional cost, whether it's used or not.
Death Benefit
The death benefit is what makes a life insurance policy a life insurance policy; the funds given to your beneficiaries in the event of your death. Protecting what's most important to us - our loved ones - is paramount, even after we are no longer here, and the death benefit in an IUL accomplishes just that.
Depending on how an IUL policy is structured and the amount of cash value within the policy, this death benefit can grow over time, leading to even greater coverage than the original approved amount.
Tax Advantages
When the cash value begins to accumulate within an IUL policy, it occurs on a tax-deferred basis. This means that the growth realized through the indexed strategy is not taxed from year to year, allowing the power of compound interest to work without any resistance.
However, unlike retirement plans with tax-deferred growth, like the 401(k), 403(b) and the IRA, the funds accessed from the IUL via policy loans are not taxed since income realized from loans is not taxable per IRS rules. This allows your cash value to go much further, greatly decreasing your risk of outliving your funds in retirement.
Lastly, the death benefit given to your beneficiaries at your passing is also paid out tax-free. This greatly aids in the transfer of wealth to the next generation. In contrast, funds left at death for the beneficiary of a 401(k), 403(b) or IRA are taxed once again upon transfer, which eats up a significant portion of those dollars.
To learn more about the benefits of the IUL, watch the following video:
A 3:1 Match For Your IUL?
Although the IUL gives you numerous benefits and advantages on your road to retirement, a novel program takes the IUL and structures it in a manner previously only marketed to the ultra-wealthy.
After premiums are paid into the policy over just 5 years, they are ultimately matched by lender dollars at a ratio of up to 3 to 1, leading to 60-100% more tax-free, supplemental income from the policy in retirement years, leading some to call it "The 5 Year Retirement Plan". All of this is accomplished without loan documents, interest payments, credit checks or personal guarantees.
The 4 main requirements are:
Age: 18-65
Overall Health: Average or better (no smoking)
Personal Income: $100,000 per year minimum
Household Net Worth: $1 Million (including home equity)
Watch the following short video to learn more about this program that could transform your retirement. You can also get a personal estimate of your potential benefits.
If you would like to see how an IUL can work specifically for you, click below to schedule a free consultation with us. It would be our pleasure to serve you in your journey towards financial security and peace of mind.
**The information provided on this website does not constitute financial advice. Consult with a qualified financial advisor before making any financial decisions based on the information provided here.