BEST IUL COMPANIES, PRODUCTS, AND PROFESSIONALS indexeduniversal.life 1-800-743-9221 [email protected] IUL2022BestIULCo
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 TABLE OF CONTENTS 03 04 08 08 09 10 12 20 22 23 Best Indexed Universal Life (IUL) Insurance Companies, Products, and Professionals What is Indexed Universal Life (IUL) Insurance? Using Indexed Universal Life (IUL) to Supplement Your Retirement Income How Loans from an IUL Policy Can Enhance Your Retirement Where Indexed Universal Life (IUL) Insurance May Fit in Your Financial or Retirement Plan Best Indexed Universal Life (IUL) Insurance Policies The 10 Best IUL Insurance Companies Is Indexed Universal Life (IUL) Insurance a Good Option for You? What is the Premium Cost of an Indexed Universal Life Insurance Policy? How to Find the Right IUL Policy for Your Specific Objectives 2
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Best Indexed Universal Life (IUL) Insurance Companies, Products, and Professionals Today, many investors (including retirees) are seeking a way to grow their portfolios while at the same time keeping their principals protected. With a roller-coaster stock market of late, coupled with over a decade of historically lowinterest rates, this could be a difficult task to master. But having an indexed universal life (IUL) insurance policy as a part of your overall financial plan can help. Not all indexed universal life (IUL) insurance policies and companies are the same. So, before moving forward, it is essential to know what you are purchasing and the carrier’s financial strength selling it to you. The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life 3
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Indexed universal life (IUL) insurance is a type of permanent life insurance policy that provides death benefit protection and a cash value component. Unlike whole life, or even regular universal life insurance (which primarily generate low returns in their cash value accounts), IUL primarily generates its return based on the performance of one or more underlying market indexes, like the S&P 500 or the Dow Jones Industrial Average (DJIA). This means that you can boost your returns in the policy’s cash component, possibly even doubling or tripling them in comparison to other types of permanent life insurance (as well as compared to other “safe” money investments like certificates of deposits and bonds). In the case of indexed universal life insurance, in policy contract years, when the index (or the indexes) that are being tracked performs well, a positive return is credited to the policy’s cash value, typically up to a preset maximum limit. The crediting methods that are used with indexed universal life (IUL) insurance may include one or more of the following factors, and in some instances, a combination of more than one will be used by the insurance carrier: Cap(s) Participation Rate(s) Spread(s) With IUL insurance, a cap represents the highest rate of growth that can be credited to the policy’s cash value. Therefore, if an IUL policy has a cap of 7%, and the underlying index generates a 10% return for the year, 7% will be credited as a return on the cash value for that period. Conversely, suppose the cap on the IUL policy is 7% and the underlying index (or indexes) returns 3% for a particular policy contract year. In that case, the 3% will be credited to the cash value component for that period. The offering insurance company also sets the participation rate on an IUL policy. These rates refer to the percentage of the index’s gain credited to an IUL’s cash value. For instance, if the participation rate on a policy is 80%, and the underlying index(es) generates 10% in a given time frame, then the cash value would receive an 8% positive return (80% of 10% equals 8%). What is Indexed Universal Life (IUL) Insurance? 80% participation rate X 10% return on the underlying index = 8% return credited to IUL cash value 4
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 A spread may also be used as part of the formula for determining an IUL policy’s cash value return in a given period. This is also expressed as a percentage. In this case, a certain amount will be subtracted from the return generated from the underlying index(es). For example, if there is a spread of 4%, and the index being tracked returns 10% in a given contract year, then 6% will be credited to the cash value (10% minus a 4% spread equals 6%). 10% return on the underlying index – 4% spread = 6% return credited to the IUL cash value In return for the potential limits on the upside of an IUL policy’s cash value, if the underlying index performs poorly in a given contract year, there are no losses incurred. In fact, with many IUL policies, the cash value is still credited with a guaranteed “floor” minimum rate such as 1% or 2%. So, even if an index loses value, the cash in the IUL policy can still keep growing. Therefore, given that there are no losses incurred, there are no negative returns that the account has to “earn back” before the cash value gets back to even, and because of that, the value can continue to build up over time. For example, if an investment that you hold for ten years generates a positive 10% return in years 1, 3, 5, 7, and 9 and a negative 10% return in the alternate years, you would essentially lose money. This is because any time there is a loss incurred, the value must get back to an even number before it can start generating any gains again. End of Year Gain or Loss Value of Account 1 10% $1,000.00 2 (-10%) $990.00 3 10% $1,089.00 4 (-10%) $980.10 5 10% $1,078.11 6 (-10%) $970.30 7 10% $1,067.33 8 (-10%) $960.60 9 10% $1,056.66 10 (-10%) $950.99 Investment with Alternating 10% Positive and 10% Negative Returns Source: The Retirement Miracle. By Patrick Kelly. 5
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 In comparing those same returns to the funds in an IUL policy, though, if the underlying market index being tracked returns a gain of 10% every other year for ten years but also incurs a loss of 10% in the other five years, the cash value would continue to perform in the positive. All your previous gains and your principal in the cash component cannot be lost in this case. End of Year Gain or Loss Value of Account 1 10% $1.000.00 2 0% $1,100.00 3 10% $1,210.00 4 0% $1,210.00 5 10% $1,331.00 6 0% $1,331.00 7 10% $1,464.10 8 0% $1,464.10 9 10% $1,610.51 10 0% $1,610.51 IUL Policy with Alternating 10% Positive and 10% Negative Returns The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life 6
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Therefore, the principal protection, even in years where the underlying index performs poorly, coupled with the taxdeferred gains that are allowed in an IUL policy, allows the cash value component to grow and compound exponentially. This is especially the case over time, and in turn, to outperform a fully taxable investment (with all other factors being equal). In this case, the funds generate a return on the principal, the previous gains, and the amount of money that would have otherwise been paid out in taxes. 7
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 The cash inside an indexed universal life (IUL) insurance policy can be used for any need that the policyholder sees fit. The cash from the policy can be accessed either through a withdrawal or by taking a policy loan. If funds are withdrawn from the policy, it could “cost” you in terms of taxes, surrender charges, or an additional 10% IRS “early withdrawal” penalty. Therefore, it is possible that you could only net out about 50% of the total withdrawal. The good news is that there are some solutions you could turn to. For instance, because it can be “expensive” to withdraw funds from an IUL policy (in turn, reducing the amount of money you have to use from the withdrawal), many policyholders take an alternate route for accessing money from the cash value. This is done by way of a tax-free loan. Using Indexed Universal Life (IUL) to Supplement Your Retirement Income Although many people do not like to take on debt, a loan from an indexed universal life (IUL) insurance policy could be pretty enticing. One reason is that you will have use of 100% of the money you access, as there is no tax due on the borrowed funds. In addition, you are technically borrowing these funds from the insurance company and not directly from your IUL policy’s cash value. Therefore, interest will continue to be generated on the total amount of the cash in your plan. In looking at a hypothetical example, if your IUL policy has a cash value of $80,000 and you borrow $40,000, the return on your cash component is still determined based on the total $80,000. As an additional bonus, even though interest will accrue on the loan’s outstanding balance if the loan has not been paid back in full by the time the insured passes away, the balance will simply be paid off using the proceeds from the death benefit. After that, the remaining death benefit funds will be paid to the beneficiary(ies) named in the policy). You could also have the opportunity to receive the money cost-free and tax-free. This is because, even though the insurance company will charge you an interest rate on the borrowed funds, this interest could essentially be offset by the interest that your money is continuing to earn. As an example, if the insurance carrier charges you 2%, which is quite possible, life insurance policy loans will often have a lower interest rate than traditional loans from banks and other lenders). Moreover, the money that is sitting in your policy’s cash value is also earning a 2% rate of interest, then you have just secured a no-cost distribution. It is highly recommended that before you take any type of cash from an IUL policy, though, you work with a specialist to structure that loan provision, so it fits all of the required parameters and obtains the best rates possible. How Loans from an IUL Policy Can Enhance Your Retirement 8
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Indexed universal life (IUL) insurance can provide you with a long list of benefits, however, this particular financial vehicle may or may not necessarily be suitable for your specific needs, risk tolerance, time frame, and objectives. So, it is crucial first to determine what you want your money to do before choosing the tools to accomplish these goals. You should also assess the positive and negative impacts of accessing IUL cash value funds. For example, you gain another great benefit by accessing tax-free loans from your life insurance retirement plan. These funds will not negatively affect the taxation of your Social Security income. Many people do not realize that their Social Security retirement income benefits could be taxable. The amount of your Social Security benefit that could be subject to taxation will depend on a couple of factors. These factors include your age when you file for Social Security, and whether you have other income sources (wages, self-employment income, dividends, interest, and other taxable income). It will also depend on how you file your federal income tax return i.e., as a single individual or as a married person who is either filing jointly or separately. So, depending on whether you file as a single or married taxpayer and how much you earn from other sources, you could have up to 85% of your Social Security benefit taxed. Other benefits of accessing a tax-free loan from an IUL policy could include paying off higher-interest debt, such as credit card balances or vehicle loans, and purchasing a second or vacation home without going through a traditional lender to take on a new mortgage. Where Indexed Universal Life (IUL) Insurance May Fit in Your Financial or Retirement Plan The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life 9
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 There is not just one IUL policy right for everyone across the board because everyone’s needs vary. The premium charged for these policies can also differ based on where they are purchased from, even if they offer the same benefits and coverage. On top of that, several indexed universal life (IUL) insurance policies provide additional features and benefits that can help you to more closely “customize” the plan to fit your specific needs. These can include one or more of the following: Terminal / Chronic Illness Waiver: With many IUL policies, you can access a portion of the funds penalty-free if you have been diagnosed with a terminal and/or chronic illness. Long-Term Care Waiver: Many indexed universal life insurance policies will also allow accessing funds if you require care in a nursing home for at least a certain amount of time (such as 90 days). This, in turn, can help you to keep other assets intact, and as such, used for their originally intended purposes. No income limit: Unlike a Roth IRA account, where you could earn “too much” income to open and fund an account, there are no income limits for indexed universal life (IUL) insurance policy participants. This means that those who are higher income earners can still have the opportunity to use this type of savings and income planning for retirement. No age limit: When taking a tax-free loan from an IUL policy, the IRS will not penalize you for taking distributions before age 59 ½. Therefore, if you opt to retire early and/or you wish to use the funds for other purposes, you can do so without Uncle Sam coming for his share. No contribution limit: Unlike IRAs and employer-sponsored qualified retirement accounts, there is no limit on how much you can contribute to a life insurance policy each year. So, even if you have “maxed out” your yearly contributions to these other plans, you can still contribute to your life insurance policy with no upper limit. No Required Minimum Distribution (RMD) requirements: Unlike the traditional IRA and 401(k) plans, which now require that you start taking distributions from the plan at age 72, there is no such rule with indexed universal life (IUL) insurance. So, if you don’t need the money, it can remain in the policy’s cash value and continue to grow on a tax-advantaged basis. Protection from creditors: In many instances, the money in your life insurance policy’s cash value is protected from creditors. Therefore, even in the event of a lawsuit or other situation that could threaten your personal assets, these funds will typically be safe. The plan is considered to be “self-completing”: Because of the death benefit associated with indexed universal life (IUL) insurance policies, these plans are considered to be “self-completing.” What that means is even in an unexpected event, your survivors will still be protected financially with the policy’s income-tax-free death benefit. Funding mechanism in a business succession plan: Indexed universal life (IUL) insurance could also be a funding mechanism for business succession planning. For example, a company will purchase life insurance coverage for executives and/or other high-ranking individuals with a key person plan. The business is named as the policy beneficiary. Then, suppose a key person passes away while the life insurance policy is still in force. In that case, the death benefit is paid out to the company for keeping the business afloat until a replacement is found or until the business is ultimately sold to the right buyer. It may also be possible for you to add one or more riders to an IUL policy. Life insurance policy riders represent an addition or a subtraction of a particular benefit or feature on a policy. Best Indexed Universal Life (IUL) Insurance Policies 10
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life Some of these riders may cost you an additional premium, while others may be free. For instance, depending on the particular IUL plan, some of the most common riders that may be offered include: Waiver of Premium Rider: The waiver of premium rider will allow the policyholder to stop paying premium payments if they become critically ill, seriously injured, or disabled. Based on the actual policy and the rider, other criteria may also need to be met to trigger the waiver of the premium. Accelerated Death and Dismemberment (AD&D) Rider: With the accidental death and dismemberment, or AD&D, rider, a benefit is paid if the insured dies or loses a limb or digit (which may include eyesight, hearing, or speech) in an accident. Disability Income Rider: This rider provides a supplemental income benefit if you become fully disabled, as defined in the policy. The income payment is usually stated as a percentage of the policy’s death benefit. So, for instance, in this case, if the face amount of the policy is $100,000, then the monthly income paid out would be $1,000. Guaranteed Insurability Rider: The guaranteed insurability rider allows purchasing additional life insurance in the future without proving your insurability (such as per your health condition). Generally, the guaranteed insurability rider will only allow the purchase option(s) at pre-specified times and/or for various life events, such as the insured getting married or having a child. This rider may be a viable option if you cannot afford a large amount of life insurance at this time but will need to increase your coverage later on. It can help if you work with a well-versed life insurance specialist in indexed universal life (IUL) insurance and how these policies are structured. That way, you can be more assured that your plan is suitable for your particular situation. 11
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Given their flexibility and opportunity for higher cash value growth, indexed universal life (IUL) insurance policies have become quite popular throughout the past decade or so. As a result, many insurance carriers are getting on board and offering one or more IUL policy options. Before committing to an indexed universal life insurance policy, you must understand how the policy works and that you review the insurer that is offering it. You must determine whether or not it is financially secure and that it has a positive reputation for paying out its claims to policyholders and beneficiaries. With that in mind, the ten best indexed universal life insurance companies include the following: • Allianz • Northwestern Mutual • Prudential • AIG • Minnesota Life The 10 Best IUL Insurance Companies • John Hancock • North American Life Insurance Company • Pacific Life • Transamerica • Penn Mutual 12
Allianz The Allianz Group is one of the leading integrated financial services providers in the world. Allianz serves more than 100 million customers and is located in over 70 countries. The company offers a wide range of financial and insurance products, including property, health, and life insurance coverage for companies and consumers. Allianz is considered to be strong and stable financially. This insurance carrier also has high broker-dealer top insurer rating agencies, including: A+ from A.M. Best Company A1 from Moody’s Investor Services AA from Standard & Poor’s The company offers the Allianz Life Pro+ Advantage Fixed Index Universal Life Insurance Policy that provides death benefit protection, along with the opportunity for a higher return on the cash value compared to whole life and regular universal life (UL) insurance. Like most other IUL plans, this policy also allows access to funds for various financial needs. (Note that many indexed universal life insurance policies will allow you to withdraw up to 10% of the policy’s cash value each year without incurring a surrender penalty, even during the surrender charge period). In addition, this policy can also include “living benefits” to help pay the expenses associated with a serious illness diagnosis, such as medical costs, travel to and from doctors’ appointments, and/or necessary supplies and equipment. Some additional riders could be added to the policy to more closely “customize” the plan to your specific needs. Northwestern Mutual Northwestern Mutual traces its roots back to 1859, paying its first death benefit claim of $3,500, which was more capital than the company had available then, just one year later. Northwestern Mutual does not have shareholders to report to as a mutual insurance company. Instead, the company is essentially “owned” by its policyholders. As of year-end 2020, Northwestern Mutual had more than 4.5 million clients. The company paid out approximately $4.8 billion in life, disability, and long-term care insurance claims in 2018, deeming it one of the strongest and most stable insurers in the nation. Due largely to its financial strength, Northwestern Mutual was ranked as the Best Life Insurance Company by NerdWallet. It is also one of the Top 5 U.S. independent broker-dealers ranked as one of the World’s Most Admired Companies in the 2021 FORTUNE magazine annual survey. Given its strong financial foundation, Northwestern Mutual has received high ratings, including: A++ from A.M. Best AAA from Fitch Ratings Aaa from Moody’s Investor Services AA+ from S&P Global Ratings 13 IUL2022IULvRoth [email protected] • indexeduniversal.life • 800-743-9221
Prudential For over 140 years, Prudential Financial has helped individual and institutional customers with growing and protecting their wealth. The company is recognized as a trusted brand and one of the world’s most admired companies. It has operations in the United States and parts of Europe, Asia, and Latin America. This company boasts roughly $1.73 trillion in assets under management, with nearly $5 billion in liquid or highly liquid financial vehicles (as of October 2021). Products offered through Prudential include life insurance, annuities, mutual funds, investment management, and retirement-related services. Prudential provides several options to indexed universal life insurance, including the: PruLife Founders Plus UL PruLife Index Advantage UL PruLife Survivorship Index UL The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life 14 IUL2022IULvRoth [email protected] • indexeduniversal.life • 800-743-9221
American International Group (AIG) American International Group (AIG) is an extensive finance and insurance corporation with operations in more than 80 different countries. Headquartered in New York, AIG has offices around the world, and it serves approximately 87% of the Fortune Global 500 and 83% of the Forbes 2000. In fact, according to the company’s website, nearly 2.5 million people trust this company and its subsidiaries to help them prepare for retirement and beyond. AIG / American General Life Insurance Company offers a full range of term and permanent life insurance policies. This insurance carrier had some challenges during the 2008 recession, and the government even bailed it out to the tune of over $200 billion. Still, the company repaid these funds and has essentially (once again) rebuilt itself into a financial and insurance powerhouse. AIG holds high ratings from the insurance rating agencies, including: A+ from Standard & Poor’s A2 from Moody’s Investor Services A from A.M. Best A+ from Fitch The indexed universal life insurance that is offered via AIG provides upside potential in the cash value component, with downside protection in any type of stock market or economic environment. This cash may be accessed via withdrawals or loans, and it can be used for future retirement income and/or long-term wealth accumulation. Minnesota Life Securian Financial owns the Minnesota Life Insurance Company, and while this company is not necessarily a household name (as it pertains to insurance or financial services companies), it does offer a variety of life insurance and annuity products. It is also considered strong and stable financially, and it has a good reputation for paying out its policyholders’ claims. Because of that, Minnesota Life Insurance Company has received high ratings from the insurer rating agencies, including an A+ from A.M. Best. This carrier offers several options for indexed universal life insurance coverage, including the: Eclipse Survivor ll Indexed Universal Life Insurance Eclipse Accumulator Indexed Universal Life Insurance Eclipse Protector ll Indexed Universal Life Insurance 15 IUL2022IULvRoth [email protected] • indexeduniversal.life • 800-743-9221
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life John Hancock John Hancock Financial has been in the business of helping people grow and protect wealth for approximately 160 years. In the first quarter of 2021, the company generated $485 million in core earnings, and it held $547,327 million in assets under management and administration. It also had $119 million in life insurance sales during that period. This company is considered to be one of the strongest in the insurance industry in terms of financial stability and claimspaying to its policyholders. It has been given the ratings of: A+ by A.M. Best Company AA- by S&P Global Ratings A1 by Moody’s Investors Services AA- by Fitch Rating Inc John Hancock currently offers three competitive indexed universal life insurance policies to help meet the needs of its customers. These include the: • Accumulation IUL – This offers life insurance protection with strong cash value accumulation potential. • Protection IUL – This plan has low-cost permanent life insurance protection with cash value accumulation potential. • Protection Survivorship IUL – With this plan, two lives are covered while also providing the opportunity for taxdeferred cash value build-up. 16
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Pacific Life Pacific Life Insurance Company has been in business for over a century. It has helped millions of people with their financial needs via a wide range of growth and protection products. As of year-end 2020, Pacific Life held $190,672 million in company assets, with more than $12,260 million in equity. Pacific Life brought in nearly $11,500 million in operating revenues. Considered strong and stable financially, Pacific Life has received the following ratings from the insurer rating agencies: AA- from S&P Global A+ from A.M. Best Aa3 from Moody’s Investor Services AA- from Fitch This insurer offers a wide array of growth, protection, and income alternatives, including mutual funds, annuities, and life insurance – such as term, whole life, universal life, variable universal life, and indexed universal life (IUL). While the available IUL products can differ from one state to another, Pacific Life Insurance Company offers the following indexed universal life insurance coverage plans: • Pacific Horizon IUL • Pacific Trident IUL • Pacific Discovery Xelerator IUL 2 • Pacific Indexed Accumulator 6 (PIA 6) • Pacific Indexed Estate Preserver 3 North American Life Insurance Company As one of the leading providers of life insurance and annuities in the United States, North American Life has been in business since 1886. Owned by Sammons Financial Group, North American Life has received a rating of A+ from A.M. Best. This company is considered strong and stable financially, and it paid out approximately $500 million in death benefit claims during the year 2020. North American Life offers term, universal, and indexed universal life insurance protection. With the latter life insurance product, there is the potential to grow the cash value on a tax-deferred basis without investing directly in the stock market. There is also a flexible, adjustable premium and a flexible death benefit that can be revised as your needs and objectives change over time. 17
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Transamerica Transamerica has been in the business of helping its clients to grow and protect wealth since 1904. Founded in San Francisco, the company grew and expanded quickly, even in the early years of financial turmoil in the United States. In 1999, Transamerica was acquired by the Aegon Group, one of the world’s leading providers of life insurance, pensions, and asset management. Today, the company provides investment, retirement, and insurance solutions to over 11 million customers throughout the United States. Transamerica Life Insurance Company is considered strong and stable, and the company has a good reputation for paying out its claims to its policyholders. The ratings for the company include: A from A.M. Best A+ from Fitch A1 from Moody’s Investor Services A+ from S&P Global Term and permanent life insurance are available through Transamerica. This includes indexed universal life coverage that provides permanent death benefit protection, index-based cash value growth (along with a fixed account option), and a guaranteed minimum interest rate, even in volatile stock market conditions. Current and future needs may be met with the Transamerica Financial Foundation IUL policy. Growth of the cash value in this policy can be based on the performance of the S&P 500 index, a global index account, and/or a basic interest account (based on how you allocate your funds). The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life 18
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Penn Mutual Penn Mutual was founded in 1847, and the company paid its first death claim just one year later. The company began offering annuities in 1888. This insurance carrier is considered to be very strong and stable financially with: A+ rating from A.M. Best Company Aa3 from Moody’s Investors Service A+ from Standard & Poor’s AA from Kroll Bond Rating Agency The company has also been rated as a 93 (out of a possible 100) on the Comdex Life Insurer Financial Profile. As a mutual insurer, Penn Mutual is owned by its policyholders, not stockholders. Every decision that the company makes is intended to be in the best interest of its clients. Penn Mutual provides both term and permanent life insurance coverage, including indexed universal life. The company’s Accumulation Builder Flex IUL policy offers diverse indexed accumulation options, along with a guaranteed minimum “floor” rate of 1% (as of late 2021) and guaranteed enhancement on all indexed accounts to boost accumulation. There are five indexed accounts for policyholders to choose from, so the policy can be more closely “customized” to meet specific needs. 19
Even if a particular financial vehicle may be a good fit for your retirement plan, there can still be some important factors to consider before you make what could be a lengthy (and costly) commitment to purchasing it. With that in mind, you must know both the advantages and potential drawbacks of having an indexed universal life (IUL) insurance policy in your retirement plan. Pros of Indexed Universal Life (IUL) Insurance • Some of the biggest benefits that you may be able to attain through indexed universal life include: • Death Benefit (which is received free of income tax by the beneficiary) • Potential for Low Premiums • Flexibility (in terms of premium, death benefit, and cash value investment allocations) • Tax-Deferred Growth of the Cash Value • Opportunity for Higher Returns (compared to whole life and regular universal life insurance policies) • Guaranteed Minimum Floor Return • Protection of Principal (in any market or economic environment) • Ability to “Customize” the Policy Using Riders • No Income Limits • No Maximum Annual Contribution Limits • No Required Minimum Distribution (RMD) Rules • Some Liquidity / Withdrawals (even during the surrender charge period) • Funding for Business Succession Planning • Tax-Free Loan(s) Is Indexed Universal Life (IUL) Insurance a Good Option for You? The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life 20 IUL2022IULvRoth [email protected] • indexeduniversal.life • 800-743-9221
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Potential Drawbacks of Indexed Universal Life Insurance Given all of the potential benefits of IUL insurance, there are still a few items that you need to be mindful of before making a long-term commitment to this type of policy. Some of these drawbacks may include the following: • Upside return limit (due to caps, participation rates, and/or spreads) • Surrender charges (at least during the early years of the policy) • Premium could increase in the future (due to higher insurance costs) • Possible additional 10% IRS “early withdrawal” charge if funds are accessed before turning age 59 ½ • Must be able to qualify for the insurance • Policies, particularly the cash value crediting methods, can be confusing 21
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 If it seems like an indexed universal life (IUL) insurance policy might be a good fit for you about its tax benefits, as well as the financial protection that it can provide, it is a good idea to obtain and compare several quotes from multiple insurance carriers. That way, you can determine which plan will be the best and the most affordable for you. Several criteria are typically considered when determining the premium cost for an indexed universal life (IUL) insurance policy. These factors can include some or all of the following items: • Amount of the proceeds / death benefit coverage • Age and gender of the insured at the time of application • Health history of the proposed insured (as well as family health history) • Prescription medications used • Previous and/or upcoming surgeries or medical procedures • Smoking status (including cigarettes, cigars, marijuana, and chewing tobacco) • Occupation (particularly if it is risky, such as being a police officer or a firefighter) • Marital status • State of residence • Other life insurance coverage that the insured has in force (and the amount of those proceeds) • Insurance carrier that is offering the IUL policy In addition, you may also be required to undergo a paramedical exam where you will provide additional health-related information and submit a blood and urine sample so that it can be tested for various health conditions. This way, the insurance carrier can better understand how much risk it may take if it approves you for the life insurance coverage. What is the Premium Cost of an Indexed Universal Life Insurance Policy? The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life 22
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 Given the advantages of owning indexed universal life (IUL) insurance, you may be a good candidate for it if you: • Are looking for secure permanent death benefit protection for your loved ones and/or business succession requirements • Would like to have additional alternatives that can generate tax-deferred growth (even if you have already “maxed out” the annual contributions to an IRA and/or employer-sponsored retirement plan) • Want the opportunity to generate higher growth than whole life and regular universal life insurance can offer, yet also want to have the assurance that principal will be safe, even if the stock market incurs a “correction” • Are in good health at the time of policy application (in order to qualify for the death benefit coverage) • Are seeking some additional alternatives for tax-free retirement income There are also some other essential factors to consider before committing to the purchase of an indexed universal life insurance policy. These should include the following: • Age • Marital status • Children and/or grandchildren • Aging parents (who may require financial or long-term care support) • Income-earning ability of the insured • Income-earning ability of the insured’s spouse or partner • Financial goals • Outstanding debts • Household expenses (if a spouse, partner, and/or children will remain in the home) • Other savings and/or assets that could be used for survivors’ financial needs • Amount of final expenses (including funeral and burial costs) • How long survivors would require income or financial security • Possible estate taxes due • Intended charitable donation(s) • Other legacy needs How to Find the Right IUL Policy for Your Specific Objectives 23
IUL2022BestIULCo [email protected] • indexeduniversal.life • 1-800-743-9221 • Income tax bracket • Income needs in retirement • Other retirement income sources • Contributions to other tax-advantaged plans, like IRAs and/or employer-sponsored retirement account(s) • The “floor,” or guaranteed interest rate on the IUL policy • Any caps, participation rates, and/or spreads associated with the return on the cash value • Index(es) that are tracked in the policy • Financial stability and claims-paying reputation of the insurance company offering the policy With all of that in mind, if you’re ready to learn more about finding the right IUL policy, or even to determine whether or not indexed universal life insurance is a good option for you, feel free to contact us directly and set up a time to talk with a retirement income specialist. We can also help you compare different IUL quotes so you can determine your premium outlay. You can set up a no-cost, no-obligation meeting, which can be online, in-person, or over the phone, by calling 800-743-9221 or sending an email to [email protected] We look forward to answering any questions you may have and assisting you in enhancing your financial security, both before and after retirement. Disclosure: Content is not personalized financial advice and should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed. Tax and legal information provided is general in nature and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. Indexed universal life insurance may not be suitable for you depending upon your investment objectives, risk tolerance, financial situation, and liquidity needs. Accessing policy cash value through loans and surrenders may lead to a permanent reduction of the policy’s cash value and death benefit, which may lead to a potential lapse of the policy. There may be tax penalties for distributions prior to age 59 ½. Insurance product guarantees are subject to the claims-paying ability of the issuing companies success. Working with a highly-rated adviser also does not ensure that you will experience a higher level of performance. Please contact the adviser for more information regarding the criteria for any awards or rankings noted. Ratings can be based on client evaluations, professional activity and promotional fees paid by the professional. The Best Results Come From Expert Advice. Discover How You Can Benefit From An IUL Expert. Visit IndexedUniversal.Life 24
IUL2021IULvTerm [email protected] • indexeduniversal.life • 800-743-9221 25 Indexed Universal Life [email protected] indexeduniversal.life
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