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What is an IUL?
What is an IUL? An indexed universal life (IUL) insurance policy comes with many benefits as a financial vehicle for retirees. Yes, an IUL provides a death benefit, but it could also be helpful to you in several other ways. For example, you can actually use it as a source of income while you are still alive. What are the benefits of doing this?
Firstly, policyholders benefit from their money being protected: The money kept in an IUL policy is unaffected in the event of, for example, a stock market drop. In this way, it has an advantage compared to more traditional financial vehicles like employer-issued retirement accounts. Additionally, you may see a reasonable rate of return** on the money you put in, because an IUL’s earnings are linked to an index. Hence, the term “indexed” is universal life insurance. However, indexed interest is not the same as being invested in the stock market. The money in your IUL is not invested and will not be hurt in the event of a market drop.
What is an IUL, and how does it work? Basically, an insurance company sells you a policy in exchange for your premium. The IUL policy is typically “max-funded,” meaning the total life insurance premium is paid upfront. This way, the insurance company keeps your money protected. Interest on the money in your policy is linked to an index, but the money isn’t directly invested in the stock market. You may also have the option to link your IUL to multiple indexes instead of just one. This spreads the potential rate of return,** rather than just relying on the performance of a single index. Due to the different options available, retirees should take the time to get informed. You can do so at one of our educational dinner seminars.
Benefits of Using an IUL
There are several additional benefits to an IUL. First of all, they provide you with more flexibility than more typical retirement accounts. Tax laws function differently for an IUL. This is because it’s an insurance product, not a retirement plan account. Plans like RAs or 401(k)s come with contribution limits and restrictions on income. An IUL, on the other hand, doesn’t have any of these. Additionally, they don’t come with required minimum distributions (RMDs.) Furthermore, IULs don’t have any fees or fines if you decide to withdraw your cash value earlier than age 59 1/2.
Are you interested in learning more about these products? Contact us. You can attend one of our educational seminar events, where we’ll talk about IULs, other alternative ways of saving for retirement, and various factors that may impact your retirement. Or, you could schedule a one-on-one meeting with us to discuss your situation, needs and goals.
