What Is Indexed Universal Life Insurance & How It Works?
What Is Indexed Universal Life Insurance & How It Works?
One great way to save for retirement is by investing in an Indexed Universal Life insurance. This type of policy is a specialized type of universal life insurance that allows you to place a cash value to either a fixed account or an equity index account. An Indexed Universal Life insurance policy also allows for tax-deferred cash accumulation while also offering and maintaining a death benefit.
This policy works in such a way that the cash value will earn interest based on the increase of an equity or a bond index (and in some cases as combination of both). Interest is earned on the policy based on the movement of an external index, such as the stock market. Policyholders will now accumulate more interest over the years, which they can use for their retirement instead of simply earning it at a fixed rate.
The benefit of Indexed Universal Life insurance is the fact that it allows policyholders the chance to take advantage of any market gains without the worry or risk if the market goes down. If the market does drop, you won’t have to worry about your money decreasing because the cash value won’t go down because of that market loss.
The death benefit part of the policy is also a huge benefit for many. Not only do you get to save more money for your retirement, but your family will also be financially secure in the event of your death because they’ll receive the death benefit of the policy. They also won’t need to pay federal income taxes on it, allowing them the opportunity to pocket more of the money they’ll need during this challenging time.
How Indexed Universal Life Insurance Helps Your Tax-Free Retirement Plan
Anything tax-free is a major benefit, which is why Indexed Universal Life Insurance is appealing. You’ll get more money for your retirement since you won’t have to pay any taxes on the policy when you cash it out. Plus, any interest on the policy loan won’t have to be paid back if you continue paying the monthly premium. However, if the policy loan isn’t repaid, that loan balance will then get taken away from the death benefit in the event that you die. Your family will get any funds that are left over.
Tax-free retirement options don’t have to be a complicated process. We are here to help break down retirement planning options, presenting the information in an easy-to-understand manner. To find out more about your tax-free retirement options, don’t hesitate to give us a call. We will go out of our way to help you create a financial plan for retirement that’ll make you feel better and more secure about your future.
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