An IUL provides the value of a permanent life insurance with the cash value of the policy invested into an account that is “linked” to the performance of a market index like the S&P 500. The value to the insured by linking to the index is exactly like a Fixed Indexed Annuity…in a positive year the account can earn some of the gains of the market-linked index and in a negative year none of the losses. In addition, this cash value account has other benefits including a minimum guarantee on performance and tax advantages.

The IUL cash value can never lose money due to the market-index having a down or flat year. The insurance company guarantees your account value every year and locks in the previous year’s earnings. During the next year, the account value and earnings posted to your account are locked in until the next anniversary date of the policy. At that point if the market has grown from the previous year, then a percentage of the growth is applied to the account value. If the market has fallen, there is no change to the previous years locked in account value.

The cash value and the earnings of an IUL grow tax deferred like a qualified retirement plan (IRA and 401K). This means your account actually benefits from triple compounding earnings… you earn interest on your account principle, you earn interest on your interest, and you earn interest on the money you aren’t paying in taxes on your interest earned.

This money is your money for use at the time you decide to use it; for your children’s college education, purchases, and even retirement income – TAX FREE. Seek out your local Retirement Life Solutions Specialist to determine if an Indexed Universal Life Insurance policy may be an benefit to your family’s protection and an addition to your retirement portfolio.

What is Life Insurance?

Cost of Life Insurance?

Permanent life Insurance, like medicine and technology, has evolved to the extent that it hardly resembles what it looked like just a decade ago. The basics have remained the same, a death benefit, premiums, and an inside cash value that accumulates over time.

What has dramatically changed is the way in which cash values earn returns. The latest generation of “index linked” policies combines the security of guaranteed cash values with interest linked to a stock market index. Let’s revisit the changes that have occurred over the past decade.

The history of the change goes back into the mid 1990’s in the annuity industry. Prior to this time, investors interested in tax deferred annuities had two choices available. Fixed annuities offered a guaranteed principal with interest rates determined by the insurance companies. Variable annuities used market based sub accounts, similar to mutual funds which offered higher growth potential but no guarantees to the principal.

Evolution of Life Insurance

•  Term Life

•  Whole Life

•  Universal Life

•  Variable Universal Life

•  Fixed Indexed Universal Life (FIUL / IUL)

The first Fixed Indexed Annuities (FIA) offered principal guarantees like fixed annuities while the return was tied to a market index like the S&P 500 or the Dow. The expectation was that over time, the indexed linked returns would outperform fixed rate annuities with no risk to losing principal.

The history of cash value life insurance policies has been quite similar to that of annuities. The original form of whole life insurance offered fixed premiums and guaranteed cash values which grew over time. In the 1980’s variable universal life policies were introduced that tied the growth of the cash values to mutual fund based sub accounts. Returns were potentially higher but without any guarantee of principal. However, market downturns caused investors to be wary of losing the cash values of life insurance as this could put the death benefit at risk.

Like the evolving of the Fixed Indexed Annuity, Indexed Universal Life (IUL) offers unique advantages to the policyholder. Premiums are flexible which allow investors to increase deposits into the cash value side without increasing death benefits. Sophisticated market indexes credit higher returns than similar equity indexed annuities. Principal guarantees offer protection against market losses. Truly, this “state of the art” innovation has made life insurance a legacy planning vehicle never seen before.

Find all of this a bit confusing? That’s where an experienced professional can help you sort through all the complexity and guide you. Talk with your local Retirement Life Solutions Specialist.  Make sure you ask lots of questions to learn both the pros and cons of any policy you are considering.

What is Life Insurance?

Cost of Life Insurance?

As our average life span continues to lengthen insurance companies have updated their Mortality Tables.  These tables help insurance companies determine the amount of premium to charge for a life insurance policy.  As the insurance companies continue to recognize that we are living longer they are able to significantly lower the premiums they charge.  Make no mistake, life insurance premiums are at the lowest they have been for both new buyers and people who are looking to improve their current policy. 

If you bought a term life policy two or more years ago, depending on your health, it is very likely that you would be able to purchase the same amount of overage for less cost now than your current policy premium.  Or on the other hand, you may be able to purchase a larger death benefit for your family for the same cost as your current policy.

If you have a current whole life or universal permanent life insurance policy, you may have built up significant cash value.  Many people don’t realize that the cash value in most policies is actually used to pay a portion of the death benefit to their beneficiaries.  For example, a policy that has $20,000 of cash value in it and a death benefit of $100,000 will commonly be paid to the beneficiary as follows: 

• The beneficiary will receive the $20,000 cash value and the insurance company will pay out of their pocket $80,000 for a total death benefit of $100,000.
• This is what they agreed to pay in the life insurance policy contract. 

Many people can help their family by improving their life insurance policies by using the cash value that has been building in their current policy.  Remember, the cash value is your money. 

So how can you use your own policies cash value to your advantage and still own a life insurance policy to protect your family? 

• You can use your policies cash value to purchase a new policy with the same amount of death benefit you currently have and reduce your current cost for it. 
• You could use your policies cash value to purchase a new policy with more death benefit for your family and pay a similar cost as you are currently paying.

All it takes is a conversation with a life insurance solutions specialist who can determine if the life insurance policy you currently have is the best available for you, or if there is a better product available now that may be better for your specific situation. 

If you have not had your policy reviewed within the last 2 years it is very likely that you are missing out on significant savings.  If you are one of these people, you should take a few minutes and find out if there is something better out there for you. 

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