8 Super Advantages Indexed Universal Life Insurance
An Indexed Plan is a well-established but not well-publicized financial vehicle that provides…
- High Returns. Historical average 8%+ tax-free*. (2.5% guaranteed minimum, compare to Bank account)
- Guaranteed Safety. Equity returns when market goes up, never lose if down. (No negative returns)
- Flexible Payments. Examples assume level $5,000 annual. (Pay more, less, or even $0)
- Tax Advantages. Grow & spend $$ tax-free* any time for any purpose. (Not IRA, 401k, or 529 Plan)
- Liquidity. Withdraw, re-deposit $ – no cost, fees, tax or IRS reporting. (Not 401k, Stocks, CD)
- College Funding. Pay expenses in safest, most flexible & reliable way. (Not 529 Plan)
- Death Benefit. Forever & essentially free. (Saving goals funded tax-free if pre-mature death)
- Living Benefits. Tax free* Long Term Care payments for Terminal, Chronic and Critical Illnesses.
*Tax-free assumes no intentional violations or policy cancellation.
How Indexed Universal Life Insurance Work?
The plan allows you to safely save, grow & spend non-taxable dollars. You go up with the stock market, and your gains are locked in. When the market goes down, you don’t lose anything (no negative returns).
The advantage of an indexed universal life insurance policy offers reasonable levels of growth without the same risks that other investment options require. Although some policies may be quoted with average growth rates that are not reasonable, most can offer a conservative annual return of about 4%. That makes it possible to plan for final expenses or provide resources to family should something unexpected happen.
The advantage of an indexed universal life insurance policy offers reasonable levels of growth without the same risks that other investment options require. Although some policies may be quoted with average growth rates that are not reasonable, most can offer a conservative annual return of about 4%. That makes it possible to plan for final expenses or provide resources to family should something unexpected happen.
Because there aren’t guaranteed interest rates and other growth factors involved, an IUL typically has a lower premium compared to other forms of life insurance which provide similar benefits. At the same time, because cash value doesn’t decrease should a target index fall, the only real threat to an indexed universal life insurance policy is inflation. The premiums are variable, based on the riders and needs of the policyholder, so some rates may be higher, but that flexibility is still an advantage.
Indexed Universal Life Insurance as Investment
Smart Retirement Plan.
The Indexed Plan works as well as or better than qualified retirement plans (IRA, Roth, SEPP, 401k, Defined Benefit).
The costs are less while avoiding the contribution limits, income restrictions and never ending red tape (IRS annual reporting, administration, etc.). With tax-free growth and income like a Roth, the performance and all the features are not available from any other financial alternative.
Indexed Universal Life Insurance No Market Risk
Eliminating losses is a huge advantage. If you have $100,000 and a 50% loss, it’s now $50,000. To get back even at $100,000, a 100% return is required.
The Indexed Plan strategy of eliminating losses has consistently outperformed the market, earning close to 8%average (net of ALL expenses – with no market risk and tax free, penalty free access) over the last 20 years.
So the valuable Life insurance death benefit is essentially free.
As Jack Bogle, founder of the Vanguard Group, said: “After nearly 50 years in this business, I do not know of anybody who has ever timed the market successfully and consistently. Investors who try to outsmart the market more often get it wrong than right.”
Indexed Plans have stood the test of time, delivering attractive returns when the market is strong, and most importantly, delivering downside protection when the market falls.
Sophisticated investors appreciate the many advantages, which may be why all major US Banks ($145+ Billion in account values) and Fortune 500 companies have similar plans. With the best advice and alternatives, they save and access this tax-sheltered money. US News & World called it “a super-charged retirement account with no cap on how much goes in yearly… the mechanism is nothing short of stunning”. (RWM specially designs big or small plans to maximize performance in the same way.)
These plans combine a large tax-favored investment element wrapped by a small permanent death benefit.
Expenses are kept very low by a special design. Just to match the liquid account values (this is historically the safest place for your money), a taxable alternative must earn up to a 14% annual return (compare that to Bank other safe savings accounts around 1%).
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