Weekend Reading: Four Ways Indexed Universal Life Insurance Can Present Powerful Savings
This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
If you’re looking for an alternate route to grow savings in the midst of investment volatility, indexed universal life insurance (IUL) is a powerful option.READ THE ARTICLE
While traditional savings vehicles, such as 401(k)s, IRAs and 529s, are more susceptible to market dips, IUL offers a long-term death benefit coverage that credits interest based on the performance of a market index. In that light, here are four components of its capabilities for upside growth:
📌 IUL policies contain much less risk of volatile market loss: They offer protection with what’s called “the floor” (typically set at 0 percent), meaning if the market drops, your IUL is credited the 0 percent for the timeframe.
📌 There is a higher capacity for growth and accumulation: On average, IUL returns offer seven to eight percent annually.
📌 You can access your cash earlier: Unlike with IRAs and 401(k)s, IUL permits you to access cash as early as year two with no “penalties, fees or taxes.”
📌 IUL accumulation and income is 100 percent tax-free: This is due to IRS tax code 7702, and can become increasingly more valuable the higher you are in tax brackets.
You don’t have to be part of the ultra-wealthy to reap the benefits of indexed universal life insurance. Market protection, lifelong tax-free income and the ability to leave behind substantial savings to heirs make this a savings vehicle you shouldn’t overlook.