Life Insurance

What is an IUL?

EXPLORE HOW IULs WORK

What is an IUL?

Are you looking for life insurance? Or, do you want a second opinion on the insurance you currently have? We can help! A number of factors influence what the best life insurance policy may be to suit your needs. However, we can help you better understand your options. Many people are aware of the primary purpose of life insurance: it gives a death benefit to your beneficiaries when you pass away. However, the right type of life insurance contrast may be used to generate income for you while you’re still alive. You may be able to accomplish this with indexed universal life (IUL) insurance. So, what is an IUL, and how does it work?

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indexed universal life (IUL) insurance

What is an IUL, and How Does it Work?

An insurance company will provide you with a life insurance policy in exchange for the premium you paid. IUL insurance is frequently “max-funded,” which means the entire premium is paid upfront. The insurance company safeguards your funds, and the policy is linked to an index, allowing it to earn interest at a reasonable rate** over time. However, the funds are not invested in the stock market. In fact, you can be confident that the money in your IUL will be protected regardless of market conditions.

You may also be able to connect your IUL to multiple indexes. This spreads out the potential rate of return rather than relying solely on one index’s performance. Borrowing against your cash value (the money in the IUL) can provide you with tax-free* income. If you have money in retirement accounts but don’t want to withdraw it right away, purchasing an IUL and using it as a source of income instead could be a good option for you.

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IUL Benefits

An IUL offers numerous benefits if you choose to utilize it for your retirement. These include:

  • Protection of your cash value from the volatility of the stock market
  • Potential for indexed interest at a reasonable rate**
  • Possibility of “locking in” your gains
  • Flexibility of choices compared to some other options out there
  • Tax-free* income
  • No penalties for early withdrawal
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*Proceeds from an insurance policy are generally income-tax-free, and if properly structured, may also be free from estate tax. Income-tax-free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans. Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce the death benefit, or cause the policy to lapse. This assumes the policy qualifies as life insurance and is not a modified endowment contract. The Host and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. This content is not intended to serve as the basis for any investment or purchasing decisions, nor does it recommend or involve the purchase, holding, or sale of a security.  All figures herein are hypothetical and for illustrative purposes only to explain general concepts.  No figure is to be relied upon as being accurate nor a guarantee or projection and is meant only as a partial overview of some relevant features and benefits of general insurance products that may be in the marketplace, and whose availability will be dependent on the State of residence of the consumer, and their individual suitability for the product they are wanting to purchase. Where insurance products are mentioned, any and all guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

** Over time.

IMPORTANT CONSUMER INFORMATION
This site is for informational purposes only and is not intended to be a solicitation for or offering of any product or investment. The offer for sale of an insurance product may only be conducted in a state where the agent is licensed and the product is approved for sale. The providing of investment advice relating to securities may only be done by a properly licensed individual operating through a licensed affiliate entity, unless otherwise exempt. Comments about past performance are not to be construed as a guarantee or assurance of future performance. This website may contain concepts that have legal, accounting and tax implications. We do not provide specific legal or tax advice, nor promote, market or recommend any tax plan or arrangement. Consult a tax/legal professional for guidance with your individual situation. No representations are made as to the accuracy or completeness of the information contained herein or any information contained in any link provided herein, nor does a consumer visiting the web site create an agent-client relationship.

By contacting Joseph Faragi NJ Ins Lic. #1535851/Joseph Faragi Delaware Lic. #3003044554/James E Leader Jr. Delaware Lic. #3003046271/Faragi Group Retirement Solutions LLC NJ Ins Lic. #3000533178, you may be offered information regarding the purchase of insurance products, including fixed index annuities and life.
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