What is An IUL?

Life Insurance For Retirement

When you're in or nearing retirement, your objectives for your financial vehicles most likely change.

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Retirees typically begin looking for ways of protecting their money. It’s important to make sure your savings aren’t at risk in the event of a stock market downturn. Your life insurance goals may also begin to change as retirement approaches. The need to provide for your family after your passing may become a secondary goal to you.

Maintaining protection for your family is still important, of course. But retirement brings with it additional challenges that may impact your initial strategy. For this reason, choosing the right type of life insurance to use in retirement is important. Here at Laurus Financial, we can help you devise a strategy to protect your savings and your loved ones. One example of a way to achieve this goal is an IUL.

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What is an IUL

…and how can it be used in your retirement strategy?

Depending on your individual situation, using an IUL in your retirement strategy may be a great option. An IUL is an insurance policy, and therefore, the premium (the money that you put into it) has different tax rules. Different than, say, money invested in the stock market.

If you currently have a retirement plan such as a traditional IRA or a 401(K), you will have to pay taxes on your withdrawals. Additionally, you will have to withdraw funds after you reach a certain age. You may be able to convert some of the money in these accounts into an IUL, however, which is why it may be of interest to you.

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What are an IUL's Benefits?

There are several benefits to using an IUL in retirement. First, there are the aspects of an IUL that can help you during your retirement years:

  • An IUL's cash value is protected from drops in the market
  • Tax-free* cash value growth
  • IULs use a stock market index to determine cash value growth
  • Flexibility in how diversified you want your IUL indexes to be
  • You can fund it all at once, or over time
  • You can lock in what you accumulate
  • No fees or fines for accessing funds before you reach age 59 1/2

What are an IUL's Legacy Benefits?

An IUL also offers some unique benefits when it comes to your legacy. These could include:

  • Immediate death benefit much greater than the premium paid
  • The death benefit is tax-free*
  • The death benefit can increase over time
  • It avoids probate, instead passing directly to beneficiaries
  • Can be received as a lump sum or as an income
  • Insured can potentially accelerate a portion of death benefit for terminal illness (Long Term Care Cost)

Using an IUL to Retire Tax-Free?*

Is it actually possible to gain tax-free* income with life insurance? If you choose the right policy, you may be able to retire tax-free.* An IUL is a great tax-free* income option for retirees. With an IUL, policyholders can have access to the cash value of their account without paying taxes on that money.* Although, it’s important to note that everyone’s situation is different. You should reach out to us to review the products and policies available to you. Our team at Laurus Financial is here to help you learn more about your retirement options. We can help to examine your current situation and decide if an IUL could be a part of your financial retirement strategy.

To help determine if an IUL may be a viable option for you, we’ve put together some questions you may want to ask yourself:

  • Do you believe that taxes will be higher in the future? If so, should you start preparing now?
  • Do you have a way to offset higher taxes in your current retirement strategy?
  • How much, if any, tax-free* money do you have set aside?
  • Given the choice, would you rather pay taxes on some of your money today, or pay potentially higher taxes in the future?
  • What will the tax burden be on your beneficiaries, and is there a way to minimize it?
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Bottom line? Finding a way to get tax-free* income can greatly impact your retirement.

No one knows for sure, of course, what taxes and tax laws will be in the future. But we do know it is helpful to have a strategy that keeps possible changes in mind. Using an IUL, you can provide yourself and your family with tax-free* retirement money. Additionally, you can take advantage of some upside and get a reasonable rate of return**, over time. Lastly, you may be able to increase your income over the long term by decreasing your tax burden.

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We want our clients to have all the information they need to make the best choice for their retirement strategy. Want to learn more about your options? Give us a call or attend one of our no-cost, no-obligation events to learn more.

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  • 4905 East Main Street, Avon, IN 46123
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*Proceeds from an insurance policy are generally income-tax-free, and if properly structured, may also be free from estate tax. Income-tax-free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans. Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce the death benefit, or cause the policy to lapse. This assumes the policy qualifies as life insurance and is not a modified endowment contract. The Host and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. This content is not intended to serve as the basis for any investment or purchasing decisions, nor does it recommend or involve the purchase, holding, or sale of a security.  All figures herein are hypothetical and for illustrative purposes only to explain general concepts.  No figure is to be relied upon as being accurate nor a guarantee or projection and is meant only as a partial overview of some relevant features and benefits of general insurance products that may be in the marketplace, and whose availability will be dependent on the State of residence of the consumer, and their individual suitability for the product they are wanting to purchase. Where insurance products are mentioned, any and all guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

IMPORTANT CONSUMER INFORMATION

This site is for informational purposes only and is not intended to be a solicitation for or offering of any product or investment. The offer for sale of an insurance product may only be conducted in a state where the agent is licensed and the product is approved for sale. The providing of investment advice relating to securities may only be done by a properly licensed individual operating through a licensed affiliate entity, unless otherwise exempt. Comments about past performance are not to be construed as a guarantee or assurance of future performance. This website may contain concepts that have legal, accounting and tax implications. We do not provide specific legal or tax advice, nor promote, market or recommend any tax plan or arrangement. Consult a tax/legal professional for guidance with your individual situation. No representations are made as to the accuracy or completeness of the information contained herein or any information contained in any link provided herein, nor does a consumer visiting the web site create an agent-client relationship.

By contacting Christopher Mullis & Laurus Financial LLC, IN License #540985, IN License #3440998, KY License #690004, KY License #1041242, IL License #9307574, IL License #3000692466, you may be offered information regarding the purchase of insurance products, including fixed index annuities and life.

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