An Indexed Universal Life Insurance (IUL) Policy offers insurance with a cash value in addition to a tax-free death benefit. Both the cash value and the death benefit are useful and attractive tax advantaged ways to provide for your family. The cash value can provide you tax advantaged income in retirement, and the death benefit can provide tax advantaged cash for your family when you die.
Index Universal Life Insurance IULs are structured so that premium payments cover not just the cost of insurance, but also the extra money needed to create and maintain the cash value of the policy. Each month the policy cash value grows with excess cash payments and interest. However, the policy is also debited by the cost of insurance and policy charges/fees.
The interest growth is tied to a financial index (like the S&P 500, Russell 2000, Nasdaq 100 and the Dow Jones) and usually with a minimum growth rate and a maximum (capped) interest rate. This allows participants to take advantage of market growth without having the threat of losing money. The tradeoff for this security is the growth cap. For instance, you might have a minimum interest of 2% and a cap at 12%. If the market loses money, you don’t. If the market grows 20% or 30%, you only see 12%.
The Flexibility of IUL
One of the main reasons, IULs are popular is their flexibility.
- Premium Flexibility – The premiums are flexible each month. There is usually a minimum and maximum you can feed into the policy each month. Staying within your contracted terms, this allows you to let the accumulated cash value help in paying the cost of insurance if you miss a month’s premium. However, the policy will lapse if there is not enough cash value to cover the cost of insurance and fees. (This is true with most policies, unless you have a no lapse guarantee rider.)
- Death Benefit Flexibility – You have the ability to increase or decrease your death benefit (subject to underwriting).
Do You Need Universal Life Insurance (IUL)?
Here are some reasons you might need an IUL.
- First, if you are looking for another avenue to bolster tax advantaged (tax-free) cash flow in retirement.
- Second, if you need to leave money after you die for final expenses, income replacement, debts, or estate taxes.
- Finally, if you need an alternative to long-term care insurance.
Let’s break each of these down.
IULs for Retirement Planning
Sometimes you need another revenue stream in retirement. You probably have your taxable accounts (IRAs, Pensions, Social Security, Investments) to draw from as one stream. In addition, you might have tax free accounts such as a Roth IRA (or Social Security if you keep your tax threshold low enough), but often times you need another vehicle to in this tax advantaged category.
This is where an IUL’s cash value comes in. You can borrow against this amount in retirement and the loan is considered a tax free event. This is an avenue is not just for the super wealthy, but if you are looking for a place to grow a lot of money conservatively, this is a good place. It is also a good way to manage your tax exposure in retirement. Are you interested in keeping your taxes as low as possible in retirement? I suggest reading the book, The Power of Zero by David Mcknight to learn more.
IULs for Survivor’s Benefits
These are the traditional reasons for taking out life insurance, and they all stand-up in an IUL. You can structure your policy so that your beneficiaries will receive a lump sum of cash that is not taxed by the federal government. You will need to plan to see how much of a death benefit you will need to leave to help your family in paying off your expenses (funeral, medical) and your debts. In addition, your beneficiary(ies) might need to replace your income after you pass or pay off big ticket items to maintain their lifestyle. Moreover, the death benefit can offer money to help pay estate taxes.
IULs for Long-Term Care Planning
Long Term Care Riders are a newer benefit of IUL policies. However, only some carriers offer them. Long Term Care Insurance can be very expensive… very, very expensive. Wrapping up the “cost” of insurance in an upfront IUL rider is one way to make it less painful. With an LTC rider, qualified long-term care expenses are paid using the death benefit before death. The insurance company pays what is left to your beneficiaries as a death benefit when you pass. Remember, Medicare doesn’t cover Long Term Care.
Now that you know what Indexed Universal Life Insurance (IUL) Policy is, here is what you can do next:
- If you have decided that you want an IUL or want more information on one, you should talk to Anil Aggarwal @ 7328778585 . IUL’s are complicated.
- If you have read through this article and thought, “not me” or “not now,” then I would encourage you to consider other alternatives to solve your planning problems.
- Investing: If you need a place to access cash that is not taxable in retirement, make sure you are maxing out your Roth IRA first.
- Insurance: If you need life insurance, but just not that much, check out final expense policies, or if you are younger, term life.
What is IULIndexed universal life (IUL) insurance policies are one of the Permanent Insurance policies. This kind policies has its own place in the financial planning, protection and building legacy.
Indexed Universal Life (IUL) product works for both protection and builds cash value in the policy. A portion of the policyholder’s premium payments is directed toward annual renewable term insurance with the remainder added to the cash value of the policy after fees are deducted. On a monthly/annual basis, the cash value is credited with interest based on increases in an equity index. These policies leverage call options to gain upside exposure to equity indexes without the risk of losses. Reach me to discuss today at 732-877-8585. Anil or visit www.4Iul.com
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Would you like to be able to accumulate savings for retirement that you can receive as tax-free income during retirement? NAA Life is here to help!
Indexed Universal Life (IUL) insurance is a permanent life insurance policy that has a "living" benefit in the form of a cash value, in addition to a death benefit that is paid at death. The cash value in your policy earns interest based on either a fixed interest rate, an interest rate that is based on the increase in an equity or bond index or a combination of both. What makes Indexed Universal Life (IUL) insurance unique is the ability to earn interest based on the movement of an external index (like the S&P 500®). With indexed based interest, you are likely to earn higher interest over time than with a fixed interest rate.
Indexed Universal Life (IUL) insurance is a great tool for retirement savings because you are able to take advantage of a portion of the gains in the market when an index rises without having to take any of the risk when an index decreases. In other words, your money is at NO market risk! If the index goes down in any given year, you are guaranteed that your cash value will not decrease due to that market loss.
Not only are you able to save money for retirement through the cash value in your Indexed Universal Life (IUL) insurance policy, if you were to die prematurely, your loved ones will receive the death benefit of the insurance policy federal income tax free. That's right, tax-free!
Find out how you can set up a tax-free retirement plan by getting your Indexed Universal Life (IUL) Insurance policy today: Call 1-855-7569, or visiting https://www.naalife.com/indexed-universal-life-insurance/.
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No matter how busy you are, but you must watch this video before its too late. Make one call todayIndexed universal life insurance is a type of permanent life insurance, which means it has a cash value component in addition to a death benefit. The money in your cash value account can earn interest based on a stock market index chosen by your insurer, such as the S&P 500 or the Nasdaq Composite. Funds don't earn a fixed rate of interest but typically come with an interest rate guarantee.
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