Indexed Universal Life Products Offer Unique Value
Just as in the case where your phone redirects you to a faster route to your ending destination, an IUL can direct you to a faster route to your financial goals.
Indexed Universal life (IULs) is a type of life policy where a part of the premium goes to pay for the cost of life insurance and the rest goes into a cash-value account. The invested money has the potential to earn interest based on the indexes selected.
An IUL is tied to an index, such as the S&P 500 which has a 40-year rolling average return of 7.5%. For example, the IUL may earn a floor of 0% and a cap of 13.5% with a guaranteed minimum interest rate.
Benefits of IUL’s
- Potential of above average returns
- Return earn between 0-13.5% but normally averages 7.5%.
- Your accumulated cash value is protected from negative market returns
- A tax-free passive income stream!
- Generally, there are no limits to the amount you can contribute annually
- IUL’s permit tax-free exchange of one policy to another called a 1035 exchange
- Death benefits are income tax-free
Like any investment, understand the benefits and risks before making a decision. These policies may be good for someone who has capped out their annual ROTH IRA contributions and needs an alternative investment vehicle to create a tax-free passive income stream. It acts like a ROTH IRS on steroids!