The last thing many retirees expect is taxation on their retirement funds. Unfortunately, the sad reality is that many people have already, and unknowingly, opted into a retirement process that does precisely that. But don’t get disheartened just yet, advisors are partly responsible for not being aware of some of the latest strategies to protect your retirement assets from taxation; one of which being IUL.
So What Is IUL?
IUL is also known as Indexed Universal Life, it is a form of life insurance that enables financial professionals to structure their clients assets to provide an investment vehicle that experiences market rate growth, while still shielding investments from market losses and taxation.
How IUL Works?
IUL works as an indexed policy, instead of having to pay post taxation fees on gains and withdrawals, it is structured as a life insurance policy with built in market capped gains, and zero net loss shielding. This enables IUL, unlike IRAs, or 401ks, to allow for a tax free retirement. Although significant, it’s actually just one of the many benefits of an IUL.
Because IUL is inherently a life insurance policy, one of the biggest benefits you can expect to find, is that of the death benefit. Meaning if you were to die unexpectedly, your family and loved ones would be the recipients of a handsome tax free inheritance that will be passed on from your legacy into the future. These IUL death benefits alone can make the policy well worthwhile for many.
Another benefit, as previously hinted at above, is hedged market loss volatility. IUL is very unique in the sense that, unlike most retirement investment funds, market losses will NOT affect your invested assets, while market gains WILL. This essentially means your investments will NEVER SINK below zero due to market performance, and yet, will continue to GROW as the market is performing.
Unlike that of competing alternative investment strategies, yet another benefit that can be found in IULs, is that it has no contribution limits in place. Meaning although similar benefits can be found in Roth IRAs, and Roth 401ks; IUL contribution limits are not set; enabling you to put in as much as you’d like, at any time you’d like.
No early withdrawal penalization fees or restrictions. Another benefit of using IUL is the fact that you can choose to withdraw your money at any point in time and not be susceptible to any added fees or restrictions on doing so.
Why Aren’t All Advisors Focused on IUL?
There are really two main reasons why advisors don’t push IUL. The first reason is many advisors simply aren’t aware of it, and the benefits it can offer for their clients. And second reason; it’s simply too complicated or confusing. Many advisors don’t understand IUL and therefore default to what they know, such as IRAs and 401ks, but this ignorance is starting to catch up to them. Over the last several years IUL has been the fastest growing segment of the individual life insurance market, making up an astonishing 52% of universal life premiums paid.
Not advising on IUL and taking the time to understand the benefits of this phenomenal retirement strategy, can be one of the biggest mistakes and missed opportunities advisers are making right now; especially when considering that the younger demographics will benefit the most from this investment strategy.
Are you an advisor interested in learning more about IUL, or curious to hear more about both IUL marketing programs we offer here at Resource Solutions? Feel free to contact us, or to call us toll-free at (866)855-3710, Monday – Friday, 8:30 AM – 5:30 PM to speak with one of our marketing consultants about how we can get you started today.