Life Insurance

What Is An IUL?

What is Indexed Universal Life Insurance?

An Indexed Universal Life (IUL) policy is permanent life insurance that provides:

  • Protection of your finances
  • Potential earnings opportunities tied to market index performance
  • Cash value access
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What is an IUL Policy?

IUL policies help generate wealth and leave a legacy for your loved ones. Indexed universal life insurance pays interest according to the movement of the stock market.  Your cash value can earn interest based on an index such as the S&P 500, selected by your insurance company.

There are several common types of universal life insurance. One example is a fixed rate that is adjusted for inflation. Another example is the variable rate which is invested in the stock market, so it carries a lot of risks. Indexed universal life policies have some advantages over other universal life policies. IUL’s may be an option for those seeking insurance that offers the flexibility of universal life but with higher growth potential. These products can also offer some of the upside potential of the stock market with limited risks. An Indexed Universal Life Policy’s principle is guaranteed*, while the interest rate is based on market conditions. This can be a beneficial situation. Hybrid Financial can walk you through options based on your specific needs.

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How Indexed Universal Policies Work

An insurance premium covers some of the cost based on the life expectancy of the insured. After the fees are paid, the rest is added to the cash value. Also, the value of your money may earn an interest rate based on an index. The cash value is credited with interest based on the increase in an index (and there is no direct investment into the stock market).  In some policies, you can select more than one index instead of just one. This allows you to diversify your IUL. 

There are several ways to allocate your money, some of which generate fixed interest while others fluctuate according to an index. Additionally, this cash may earn interest depending on the index. You can earn interest on the third part of your money by investing in another index. In order to successfully plan for retirement, you have several options. Connect with us to learn more about IUL and how it might fit your needs.

Is An IUL Right for you?

Lifetime Benefits of IUL

An IUL policy can benefit your retirement strategy in a number of ways. 

Protection

The insurance company assumes the risks so that you are protected from loss. As an alternative, you can tie your return rate to a stock index. While an IUL is linked to an index it is not directly invested in an index. So, if the market has a downturn, you won’t lose money as you would if you invested directly in an index fund. Therefore, your IUL cash value can generate a reasonable return**. An IUL can protect your money no matter what happens in the market.

Flexibility

An IUL is an insurance product as opposed to investments, so you may have more flexibility. IULs and traditional retirement accounts may have different tax laws and rules. Also, IUL policies have no annual contribution limits like 401(k)s or IRAs. Additionally, an IUL policy can be withdrawn at any time for its cash value, without penalty, regardless of age. Further, IULs don’t require minimum distributions (RMDs) at 72.

More benefits are available. You can finance your policy with a lump sum or by paying overtime. Also, the cash value can be used as income. And, you can do so without paying income taxes since it is fluid. Additionally, distributions from IULs are tax-free. Finally, one of the most important aspects may be that you can access your death benefit while still alive, tax-free, to pay for long-term care. Get in touch with us to learn about all your options.

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Protect Your Family’s Legacy

Your family may inherit a portion of your wealth after you pass away. Depending on how the index performs, the death benefit may increase over time. Your beneficiaries usually receive far more money than you originally contributed. Beneficiaries’ benefits are permanent, nontaxable, and do not need to go through probate. 

Our team at Hybrid Financial can assist you in picking the right life insurance plan to suit your needs and protect those you care about.

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*Backed by the claims-paying ability of the carrier.
**Reasonable rate of return over time.

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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.

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 Rocky Campbell TX Ins Lic #1754497 / Hybrid Financial LLC TX Ins Lic #2538408 you may be offered information regarding the purchase of insurance products, including fixed index annuities and life.

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