Life Insurance
What is an IUL?
What is an IUL?
An indexed universal life (or IUL) insurance policy is an insurance company that comes with a number of benefits.
Like any other life insurance product, an IUL provides your beneficiaries with a death benefit. However, it also comes with features that can benefit you, the policyholder, while you are still alive. Firstly, you may earn a reasonable rate of return** on your max-funded IUL. This is because an IUL gains interest based on the performance of an index (hence the term “indexed” universal life) and secondly, an IUL may offer a great way to protect your money. Additionally, because it’s a life insurance product, it may come with certain tax benefits that traditional savings accounts or retirement plan accounts do not.
What is an IUL, and How Does It Work?
An IUL is typically “max-funded.” This means that the total life insurance premium is paid upfront. Additionally, the policy is linked to an index, allowing you to gain potential indexed interest at a reasonable rate.** This product provides a level of safety that many other financial vehicles cannot while also offering potentially better returns,** making an IUL highly beneficial.
When you pay your full premium to fund an IUL, a portion of that money goes towards paying for life insurance coverage. After that coverage, including fees, the remaining money is your “cash value.” You may earn an interest rate on this money, based on an index or multiple indexes. However, it’s an important diction that an IUL is not an investment. Now, let’s explore some of the benefits offered by indexed universal life insurance.
Benefits of an IUL
An IUL offers numerous benefits, assuming you choose to utilize it in your retirement strategy. For example:
- Flexibility of choices
- Protection of your cash value
- Potential for indexed interest
- “Lock in” potential gains
- Receive income tax-free*
- No penalties for early withdrawal
Interested in learning more about this product? Reach out to us to get informed.