Life Insurance
What is an IUL
What is an IUL?
What is an IUL insurance policy? IUL stands for “indexed universal life.” It’s a type of life insurance policy that comes with a number of benefits. Like any other life insurance, an IUL provides your beneficiaries with a benefit after you pass away. However, it also comes with features that may benefit you, the policyholder, while you are still alive. You can earn a reasonable rate of return,** because the policy gains interest based on the performance of an index, while also keeping your money safe. Furthermore, because it’s it’s an insurance product, it may come with certain tax benefits that typical financial vehicles (like a traditional savings account or a retirement plan account) do not.
What is an IUL, and How Does It Work?
An IUL policy is typically “max-funded.” What this means is, the total life insurance premium is paid upfront. Additionally, it’s linked to an index, allowing you to earn a reasonable rate.** This product provides a level of safety that many other options cannot while also offering potentially better returns,** making an IUL highly advantageous. When you pay your full premium to fund the policy, a portion of that money goes towards paying for life insurance coverage. After that coverage, including fees, the money that remains is your cash value. Then, you may earn an interest rate on this money, based on an index or multiple indexes. However, it should be stressed that an IUL is not an investment. Now, let’s explore some of the specific benefits indexed universal life insurance offers:
- Protection of cash value
- More flexibility of choices
- Potential for indexed interest
- Receive income tax-free*
- Option to “lock in” potential gains
- No penalties for early withdrawal
Interested in learning more about these products? Reach out to us to get informed.