The IUL Advantage – September is Life Insurance Awareness Month, and a great opportunity to learn about the various types of life insurance, their unique benefits, and the different needs they address.
Introducing Indexed Universal Life (IUL)
What is IUL?
Indexed Universal Life Insurance is a form of permanent life insurance that provides a tax-free death benefit upon your death. It also offers tax-advantaged cash value growth you can access throughout your life. Your cash value earns interest based on the positive performance of an underlying stock market index like the S&P 500®. Interest would be credited at the end of an index segment (or term), with common segments of 1-year, 2-years or up to 5-years. If the index performance is negative during any segment, your cash value is protected from any negative market returns.
Another benefit of owning an Indexed Universal Life Insurance policy is your ability to access your policy’s cash value, 100% tax-free, through various loan options.1 You can use the money for supplemental retirement income, medical costs, to fund your children’s or grandchildren’s college education, pay for a wedding, or for personal travel…it’s completely up to you. Indexed Universal Life Insurance provides you a tremendous amount of control and flexibility.
What are the benefits of IUL?
Indexed Universal Life Insurance is more than just income tax-free death benefit protection. IUL can help meet a variety of needs, including:
- Reducing current taxes
- Potentially reducing taxes in retirement
- Principal protection from the risk of negative market returns
- Protecting your loved ones and your estate with a death benefit
- Tax-free supplemental retirement income1
- Access to funds through the policy cash value1
- Optional tax-advantaged chronic care benefits2
- No contribution limits
1Loans, partial surrenders and withdrawals will reduce both the surrender value and death benefit. Under certain circumstances, policy loans and withdrawals may be subject to income taxation. This information is accurate unless the policy is a modified endowment contract.
2Agreements/riders may be subject to additional costs and restrictions.
Indexed Universal Life Insurance is designed first and foremost to provide life insurance protection. While the interest crediting options available with these products are attractive for cash value accumulation, your fundamental objective in buying the product should be life insurance protection for you and your family or business.
Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender charges. Guarantees are based on the claims-paying ability of the issuing insurance company.
This material may contain a general analysis of federal tax issues. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances.
This is a general communication for informational and educational purposes. The materials and the information are not designed or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. If you are seeking investment advice or recommendations, please contact your financial professional.