Indexed Universal Life, or IUL

At one time or another many of us will come to the point where we contemplate a retirement plan. That can be a good feeling if you have a solid retirement plan or it can make you feel unprepared and uncertain about your future. What will I do once I’m retired? Will I have enough income to live off of?  Will I have to continue working? Is my retirement plan a good one? All these questions we will face at some point in our life. Many licensed insurance agents will tell you, the sooner you figure out the best retirement plan for your situation the better.

There are plenty of retirement plan options available for you to choose from, including the not so new kid on the block, indexed universal life insurance. IUL's may initially sound complicated, and these plans do have various components to them that can make it appear difficult to understand, however, dealing with the right insurance provider like Charleston Life insurance can make it a simple and easy to follow investment strategy. 

What is this you may ask? Indexed universal life insurance (IUL) is simply a universal life insurance policy, which means your premiums will be flexible and your policy can be changed throughout the contract. For example, if you need to change your beneficiary or premium then you’re often able to do that. The policy is not a fixed document. It is similar to whole life policies in that the policy is permanent or fixed. The main difference between an IUL and a whole life policy is that IULs are flexible and whole life isn’t. The main component of an IUL is the cash option. The cash portion of the policy increases based on the index performance on the stock market. This is pretty easy to understand but things can get much more complicated with IULs. That’s where your life insurance provider steps in and makes everything crystal clear. 

Let’s discuss the benefits of IULs. 

• If you love investing or are interested in investing your premiums in the Standard & Poor's top 500, then purchasing an IUL may be just for you. The main advantage is that the policy affords you a hands off investment option within this insurance policy to accumulate cash on a tax-deferred basis for your retirement. 
• The bottom line is that you have the ability to produce or gain cash through your insurance policy, and to change your policy based on your evolving needs. First, you can increase your retirement funds through investment opportunities and strategies. Secondly, Instead of having a fixed insurance policy, this insurance policy is flexible helping you to meet the changes that happen in your life and within the economy. Not only can you change the premiums, but you can change the face amount as well. Perhaps you need a larger insurance policy or a smaller one. You’re not stuck with your first choice. 
• You’ll be able to track and compare the performance of your insurance policy to ensure you’re getting the best results and that your policy is working for you. And if it’s not, you can always change components to make it work for you. 
• The IUL policy is passively managed which means more money in your portfolio. There are no year-end distributions and your returns are likely to be higher than actively-managed portfolios. 
• You have access to three death benefit options and you can change the level or increase the death benefit amount with few restraints. Your death benefit is also income tax-free, which is one of the most attractive benefits of IULs. 
• This tax-free income can then be converted to provide a cash flow for your retirement plan. Another popular attraction with IULs is that your investments are protected from economic downturns in the market. Any interest gains are locked and protected from loss. 
• Another advantage with the tax-free death benefit option is that beneficiaries have access to most of the money built up in the policy. Taxes are not paid to the government before your beneficiaries can collect. 
• There are usually no limitations when it comes to contributions. Many insurance plans forbid making contributions until you reach a certain age or you can only contribute a certain amount until you reach a certain age. If you want to invest at 50, that’s fine. If you want to invest $50,000, that’s no problem either. 
• Unlike many insurance policies, there is no restrictions when you can cash out or distribute money. You don’t need to be 10 years into retirement age before you can take advantage of cash buildup. 

Thanks to the Baby Boom generation of more than 50 million members facing retirement age over the next few years one of the reasons IULs are making a huge appearance on the market is the increase of people reaching retirement age. These types of insurance policies would most likely not be popular 50 - 100 years ago. But since the trend has changed and more people are living longer, many are looking into various flexible insurance policy options as part of their retirement plan strategies. And true to their form of having a versatile and progressive mindset, many of them will be looking for insurance policies that provide more flexibility and ways to increase retirement funds than what the traditional insurance policies provide.

The future will bring more who are attracted to the options, benefits, and growth involved with IULs. One thing IULs can do is help the economy. It encourages policyholders to invest in the market which overall benefits the economy as a whole. IULs are pretty much a hands-off, flexible insurance policy that does have pros and cons but works well for those that are well-versed in it and who have a knowledgeable insurance provider working with them to sort everything out and to answer all their questions promptly. If you’re interested in finding out more about indexed universal life insurance policies or are ready to see the many differences and options with these plans, contact Charleston Life Insurance. We're here to help you make the right decision and choose the right insurance policy plan for you and your loved ones.