In this article, we will explain what indexed universal life insurance is and how it can help you reach your retirement goals. Let’s first start with the basics. Universal life insurance is a permanent life insurance policy that has cash value, which means it has an investment component to it. You can invest the money from a universal life policy in different ways to suit your needs and risk tolerance. Universal indexed policies increase their cash value and potentially the death benefit at a pre-determined rate (index) in response to increases in the market value of investing indices such as the S&P 500, NASDAQ or other indices chosen by the company and insured. The increase in the cash value and/or death benefit is locked in when earned.
Options Within Indexed Universal Life Insurance
Within an Indexed Universal Life Insurance policy you can choose to increase the death benefit and/or increase the cash value when a positive market results in the policy earning interest. Younger policy holders often allow the death benefit to increase so the benefit to heirs is adjustable for inflation. Those policy holders looking to the IUL for tax free income are more likely to keep the death benefit stable and allow the cash to grow more quickly. In periods of strong market growth, both the death benefit and the cash value will grow.
Benefits of Universal Indexed Life Insurance
Universal indexed policies offer you a way to get some income from the investment component of your policy as well as increase your death benefit. Universal indexed policies can help you grow your retirement savings to meet your retirement goals. If you are worried that you’ll run out of money in retirement, an indexed universal policy can help protect you. The investment component of your policy will help you grow your retirement savings, while the death benefit protects your surviving spouse or other heirs by replacing funds spent while you were living. Universal indexed policies are great for people who are risk-averse the indexing strategies protect against any negative market performance guaranteeing no losses. It is also an important source of completely tax free income in retirement.
Drawbacks of Universal Indexed Life Insurance
Universal indexed policies are very complex and could be extremely expensive if you don’t do your research. There are many different factors that go into calculating the cost of your policy. Indexed universal policies have the potential for high expense due to their high death benefits and low cash values in the early years. Additionally, both the death benefit and investment component within universal indexed policies can be complex and difficult for any non-professional to understand. Because improperly structured plans have the potential to lose money, You should never attempt to purchase an indexed universal policy without the assistance of a qualified professional. It is critically important that your indexed universal policy be structured properly so you don’t lose the tax free status for yourself. The benefits of the policy are great as long as it is implemented properly. If you don’t plan accordingly, a long-term investment strategy like this could prove to hinder you from reaching your desired retirement outcomes. Although these drawbacks exist, they shouldn’t prevent you from exploring indexed universal policies as a game-changer with regard to your retirement.
How to Make Indexed Universal Life Insurance Work for You
Secure Retirement Strategies takes pride in being able to determine inherent risks involved with these policies, as well as choose policies and investment schedules that align with your goals and circumstances. At no point in the process will you ever be unaware of how your money is being invested and managed. On an annual basis, we’ll review your policy with you to make sure that your indexed universal life insurance policy is being maintained as efficiently as possible, as well as prepare strategies for any volatility in the financial markets. The best way to make indexed universal life insurance work for you is to understand exactly what you are buying. With Secure Retirement Strategies, we are reputable and knowledgeable providers and provide you with a team of financial experts who can help you understand and compare different types of policies to determine the best structure for you.
Universal indexed policies are permanent life insurance policies that have an investment component and take advantage of the stock market without exposing your funds to negative market performance. These policies protect you from negative volatility in the market while providing substantial tax free benefits for you and your heirs. Working with an expert in the field can give you an important part of your diversified portfolio that provides tax free benefits to you, while you’re living and active. With SRS, you’ll have that expert and the full confidence in knowing what you’re purchasing, and how that policy will work for you as efficiently as possible for a secure retirement.