Services: Life Insurance
What is an IUL
Life Insurance
What is an IUL?
An indexed universal life (IUL) policy comes with numerous benefits. Yes, just like any other life insurance policy, an IUL can offer a death benefit. Policyholders can also, however, potentially use an IUL as a way to store some of their money and earn indexed interest at a reasonable rate of return.** This is so because the interest rate on the policy is determined by an index (or multiple indexes), hence the name “indexed” universal life insurance.
While the policy is tied to an index, but your money isn’t invested directly into the market. Your interest rate will increase while the index is trending upward; nevertheless, your principal is not lost when the index is trending lower.
How do IULs Work
When you pay your full premium to fund an IUL, some of that money goes to paying for life insurance coverage. The remaining amount, minus fees, is your policy’s cash value. It might be possible for you to select more than one index to which to attach the policy. This spreads out the possible rate of return, rather than depending solely on the performance of a single index. When it comes to flexibility, insurance products like IULs may be far more favorable than traditional retirement accounts. To find out more about your options, please contact us.
IUL Benefits
As is expected for life insurance, an IUL provides a tax-free* death benefit directly to your beneficiaries when you pass away. However, you can also utilize money from an IUL while you’re still alive as a source of income. Benefits offered by an IUL, as opposed to other sources of retirement income, include:
- Tax laws function differently for an IUL (but be sure to consult a qualified tax advisor about this)
- No RMDs (required minimum distributions)
- Your value is not affected by the fluctuations of the stock market
- You can fund your policy all at once
- There is no contribution limit, which may be very helpful if you’ve already maxed out your retirement accounts
- The death benefit is received by your beneficiaries tax-free*
- The death benefit could be received as a series of payments or one lump-sum, and it is typically much higher than the premium paid.