Tax season can be brutal. And, if you’re anything like me or my clients, I’m guessing you may be wondering how to save more money and get the money you do have to work for you (instead of against you), am I right?
If so, there is good news! There is a product on the market that used to be reserved solely for the extremely rich—a secret of the wealthy. But, now, is available to everyone. This product is called an Indexed Universal Life (IUL) policy. And, is essentially an account that does it all! It provides life insurance while growing your wealth which can be used as income later in life or to pass onto your children, tax-free.
A properly designed IUL offers tax advantages that no other product can. Unlike an IRA or 401(k), there are no annual contribution limits. There are no taxes due during the accumulation phase when the policy’s cash value builds up. And, when an IUL policy-holder retires, they can take tax-free distributions of the cash value and/or pass those benefits onto their loved ones. Meaning: the total benefit amount IS the amount of money available (no tricky math involved)!
Not only that but IUL’s also allow a tax-free exchange of one policy for another, plus they are not tied to the stock market. So, when the market crashes, you don’t lose a dime of your hard-earned money. Isn’t that amazing?!
Here’s a quick example of what investing in an IUL vs an IRA might look like…
Annual Premium Payment – $5,000 x 28 Years
Option 1: Indexed Universal Life
Day 1 Tax-Free Death Benefit = $150,000
Age 65 Death Benefit = $649,783
Tax-Free Life Income, Age 66 = $63,609
($1,526,616 Withdrawn to Age 90)
After Tax-Free Income, Death Benefit at Age 90 =
$574,091
Total Investment = $140,000
Age 90 Total Benefits of Ownership =
$1,960,707
Option 2: Roth IRA
Day 1 Death Benefit = $5,000
Potential Death Benefit at Age 65: $477,106
Tax-Free Life Income, Age 66 = $23,855
($571,528 Withdrawn to Age 90)
After Tax-Free Income, Death Benefit =
$0
Total Investment = $140,000
Age 90 Total Benefits of Ownership =
$431,528
