Tax-Free
Retirement
Permanent Life Insurance– Protection for What’s Important, Potential for Growth Using Indexed Universal Life Insurance
Indexed universal life insurance is similar to other universal life insurance in that it is a permanent life insurance policy that
provides protection for loved ones — with a death benefit plus the potential for cash accumulation supplementing retirement with potential tax free income. The difference is in how the interest is calculated and when it is credited to your policy.
Capture Upside Potential With No Downside Risk.
Indexed universal life policies credit interest based in part on the upward movement of a major stock market index, subject to certain limitations.
The selected stock market index is used to determine how much interest may be credited to your policy, subject to limitations such as a “cap”; however, your premiums and cash values are never invested directly in the stock market. Indexed universal life also provides you with protection from negative market returns since zero is the lowest amount of interest that can be credited to your policy. Therefore, if the index goes down, the resulting interest credit to your policy would not be less than zero.
Universal life insurance is a type of policy where a person is allowed to choose a premium and the benefit. It allows a person to opt for a long-term/permanent protection with a lower premium. Universal life insurance is an alternative to a whole life policy, where the premium rates are set by the insurance company. The premiums of universal life
insurance are paid into an account, thus generating cash value as the premiums are invested into investment funds. With universal life insurance, a person has the flexibility of lowering the death benefit any time they want. He or she can
also add more benefits to the policy.
Indexed Universal Life
With an indexed universal life policy, you get:
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Tax-free death benefit
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The benefits of tax-deferral
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A guaranteed minimum interest rate
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A fixed rate crediting option
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Multiple indexed crediting options
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Flexible coverage throughout your lifetime
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The potential for greater interest crediting over the life of the policy
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Protection from negative market returns
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Living Benefits
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Potential tax free income in retirement years
401k, 403b, IRA, TSP, Mutual Funds, and CD's
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Money within a 401(k) plan is exposed to losses from market downfalls
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401(k) plans don’t let you borrow against them with the same flexibility as you might with IUL, generally speaking
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401(k) withdrawals before age 59.5 are subject to a 10% penalty and income taxation
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Unlike with the 401(k), distributions from an IUL policy, when taken as loans, are non-taxable
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Withdrawals from a 401(k) are subject to more substantial tax liability
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There are less restrictions on contributions to an IUL policy than they are to a 401(k) plan (these do come with some requirements)
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In the 2018 tax year, the contribution limit for a 401(k) is set at $18,500
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With its contractual guarantees, IUL offers the benefit of preserving your earning power in your professional working years
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Indexed universal life insurance can also be customized for different situations: there are riders for chronic illness, work disability, and other specialized circumstances
"Since most active mutual funds do not outperform their index or benchmark, an investor is better at controlling cost by putting their money into an index fund. That 1% saving can mean tens of thousands of dollars (or more) at retirement," -Patrick Traverse, founder of MoneyCoach, Charleston, S.C.