Life Insurance
What Is An IUL?
An indexed universal life insurance policy (IUL) is a particular type of insurance.
What is an IUL? (Indexed Universal Life Insurance)
Just like other life insurance policies, the IUL offer a death benefit. Unlike other types of life insurance policies, however, IULs are also a kind of universal life insurance. Because of this, it may offer more benefits than simply providing money to your beneficiary when you die. With universal life, there may be some opportunity to see an increase in value on your policy amount. Additionally, this policy may offer even more benefits. For instance, you may be able to protect your cash value. Also, you may decide to use an IUL as an option for some tax deferred income in retirement.
In retirement, some people elect to include an IUL as part of their overall strategy. This policy is set up so the insurance company promises to pay out a certain amount upon your death. Indeed, this means that the cash value of your policy may have some protection. Also, it is important to note that with an IUL, your money does not get put into securities, such as the stock market. Instead, you may have the option of choosing an index. When this index is up, your cash value may go up as well. However, if the index is down, your death benefit and cash value usually do not change. Certainly, an IUL may be an option for some retirees who are looking for a place to put their money for legacy purposes.
Premiums and More
Basically, funding an IUL means you are setting up some of that money to be your premium for life insurance. Conversely, any other increase in value on your policy is the cash value. Of course, you have had fees with most insurance and financial products. However, you may be able to maintain your death benefit, yet see an increase in the cash value, too. The index that links to your policy may go up or down in value. However, your IUL does not directly invest in the stock market. Therefore, the cash value has potential to increase but would not decrease due to market conditions.
Also, you may have some choices when it comes to an IUL. First, you may be able to select more than one index. Second, you might have choices in terms of which benefits you’d like. Finally, this product may have different structures, terms and conditions. Be sure to connect with us to discuss some of the options that may be available for you in retirement.
What is a Living Benefit?
Sure, index universal life policies have a death benefit. But, could they also provide some benefit during your life as well? One thing to remember is that this is an insurance product. Hence, the laws that pertain to it may be different than the laws that pertain to securities or traditional retirement accounts. For instance, 401(k)s and IRAs regulate how much money can be put into them each year. However, index universal life policies are not subject to this same regulation. Some retirees may choose to place some of their savings into this insurance once they have maximized their other accounts.
Here’s something else: IULs offer some protection for savings. The cash value of your policy remains the same (or may potentially increase) even when market conditions change. Some retirees look to these policies to help them save more money than what their other accounts allow. Also, you may put a large sum of money at once into it. Because you are placing the money into a policy, when you access your money, you are usually taking from the cash value. This may offer some tax deferred income for certain retirees.
Leaving Your Legacy
When we're gone, we want our legacy to mean something.
IULs may offer your family or loved ones some financial security. Usually, the money in your IUL is more money than you’ve put in. The amount available for your beneficiaries may go up overtime. Depending upon your specific policy, loved ones usually do not have to wait until probate court to access your IUL death benefits. Also, IUL income may be tax deferred or potentially non-taxable. Of course laws vary in each state and with each circumstance, so be sure to consult with the proper counsel.
What is an IUL for your retirement?
Curious to learn more?
Contact Safe Retirement Solutions for a complimentary meeting. Or, join us at one of our seminars.
