Indexed Universal Life Insurance

Indexed Universal Life (IUL) insurance is a versatile and dynamic life insurance product that combines elements of traditional life insurance with an opportunity for cash value growth linked to the performance of a stock market index, like the S&P 500. This insurance product provides a death benefit to protect loved ones in the event of the insured’s passing while also offering the potential for cash value accumulation and tax advantages.

One of the key features of an IUL is its flexibility. Policyholders have the freedom to adjust their premium payments within certain limits and can allocate the cash value portion of their policy into various indexed accounts. The cash value growth is linked to the performance of the chosen index, and it can benefit from market upswings while being protected from market downturns, thanks to a minimum guaranteed interest rate.

IUL can serve as a valuable asset and wealth accumulation vehicle for several reasons:

  1. Market Participation: IUL allows policyholders to participate in stock market gains without risking their principal. This makes it an attractive option for those who want growth potential without the risk associated with traditional investments.
  2. Tax Advantages: The cash value within an IUL policy grows tax-deferred, meaning policyholders do not pay taxes on the growth. Additionally, when structured correctly, IUL allows for tax-free withdrawals and loans, offering a valuable way to access funds during retirement.
  3. Death Benefit: IUL provides a death benefit, ensuring financial security for the policyholder’s beneficiaries. This can be especially important for those who want to leave a legacy or cover final expenses.
  4. Flexibility: Policyholders can adjust premiums and choose from various indexed accounts to align with their risk tolerance and financial objectives.
  5. Supplemental Retirement Income: IUL can be used as a source of supplemental retirement income, offering a tax-advantaged way to access funds during retirement, which can help maintain one’s lifestyle and achieve retirement goals.
  6. Estate Planning: IUL can play a role in estate planning, helping to efficiently pass on assets to heirs and potentially reduce estate taxes.

Incorporating an IUL into an overall financial plan can provide a balanced approach to wealth accumulation, risk management, and legacy planning. At Risk Resource, we tailor IUL policies to individual needs and financial goals. We often work with our client’s other financial advisors to ensure alignment with the broader financial strategy.