Indexed Universal Life Insurance (IUL)

Indexed Universal Life Insurance (IUL) is a type of permanent life insurance. It lasts your whole life as long as you pay the premiums. IUL’s come in 2 parts (1) death benefit; that pays money to someone when you die, and (2) Cash value that can grow over time. The advantage of an indexed universal life insurance policy offers reasonable levels of growth without the same risks that other investment options require. (Read below for the many advantages).

One of the most attractive features of an IUL is the ability to take advantage of Stock Market Returns without the risk of loss. This is done while building up a death benefit that your beneficiaries will receive tax-free.  

IUL insurance allows the Policy Owner to allocate Cash Value amounts to either a Fixed account or an Equity Index account. Policies offer a variety of well-known indexes, such as the S&P 500 or the Barclays Trailblazer sectors, and many others. IUL insurance policies are more volatile than Fixed ULs (Due to a establish set Interest rate.i.e. 3% for life) , but they are less risky than Variable UL insurance policies. With a VUL, the money is in the Stock market and has higher expense fees. Vice an IUL, where no money is actually invested in equity positions (Stock Market).

IUL insurance policies offer Tax-Deferred Cash Accumulation for retirement while maintaining a death benefit. People who need permanent life insurance protection but wish to take advantage of possible cash accumulation via an equity index might use IULs. Aside from protecting families, IULs are also great as a Key Person insurance for Business owners, Premium Financing Plans, or Estate-Planning Vehicles. IULs are considered advanced life insurance products in that they can be difficult to adequately explain and understand, unless you are properly guided by an experience agent.

How Does Indexed Universal Life (IUL) Insurance Work?

When a premium is paid, a portion pays the cost of insurance based on the life of the insured. Any fees are paid, and the rest is added to the cash value. The total amount of cash value is credited with interest based on increases in an Equity Index (but it is not directly invested in the stock market).

Why an IUL:

Most people don’t need life insurance for their whole life. But some people might need it to pay off debts, and some people might want to pass on the family’s wealth without paying taxes. Permanent policies can be good. If you have enough money, an IUL policy can help you do these things too.

You can grow your cash value more quickly if you buy an Indexed Universal Life, and the amount of risk is less. If the market falls, you won’t lose money. You can also change how much death benefit coverage you want when needed.

Advantages of an IUL:

* Contribution ages: Newborn to 70 years old

* Funded with after tax money

* No Penalties Pre-59.5 years old

* No RMD (Required Minimum Distributions)

* No Contribution limits

* No Income Limits

* Death Benefit Included

* Cash Value (cash accumulation growth)

* Cash can be used for many things (College, marriage, home down payment, new car, etc) 

* Flexibility in premiums

* Locked in Gains 

* Downside Protection in case of market downturn,

* Excellent growth Potential

* Does not Impact Social Security 

* Tax-Free Growth/Tax Deferred Growth (Loan = Tax-Free / Withdraw or surrendered=Tax Deferred)

* IULs do not tax capital gains. (Unless you Withdraw or surrendered)

* Tax-Free Retirement Income.

Indexed Universal Life Insurance (IUL) Policy builds cash value along with a Death Benefit that is good for the rest of your Life, as long you pay the premiums.  

Ideal Age : New born to 70 years old.