What Is An IUL?
Choosing the options that are right for you is a big task, and we may be able to help you make that decision. What is an IUL, and is it a viable option for you? Contact us to find out.
Different types of life insurance come with different features and could potentially help you in different ways. Let’s discuss some of those different types.
Term Life Insurance
“Term life” means that the benefits are available to you for only a certain period of time. For example, a 20-year term life insurance policy would only require payments, but also only provide a death benefit if you pass away, during a period of 20 years. Additionally, some term policies use a specific age, rather than a number of years, to set the time period for the policy. For example, you could have a term life insurance policy that only provides a death benefit until you reach age 90. It’s possible you could receive a benefit even if you outlive this policy, but this is not always the case.
Permanent Life Insurance
The category of “permanent life insurance” includes whole life, variable universal life, and indexed universal life insurance policies. With this type of policy, you pay a set premium each year, and your accounts build a cash value. Furthermore, you may receive a dividend or interest rate, depending on the insurance company and specific product. Additionally, the death benefit can sometimes be tax-free.*
What Is An IUL?
What is an IUL? An IUL is a type of insurance policy that, obviously, provides a death benefit. However, it comes with numerous other benefits, hence the “universal” in the name.
With an IUL, you can potentially take advantage of stock market returns without risking your money. Your cash value is protected since your money is held onto by the insurance company in a reserve. An IUL can generate a reasonable** interest rate using a market index, without your money actually being invested.
To help you determine if an IUL might be the right choice for you, we’ve put together a few questions you could ask yourself. If any of these questions make you rethink your current strategy, you may want to reach out to us.
- Do you believe that taxes could be higher in the future?
- Do you think you should start preparing for that possibility now?
- Do you have a way to offset higher taxes in retirement built into your retirement strategy?
- What will the tax burden be on your beneficiaries?
- Do you have a way to minimize said taxes on them?
- 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 taxes at possibly higher rates sometime in the future?