Yes! Sign up and get an IUL – Index Universal Life
When I was born in 1978, my parents purchased life insurance for me. Specifically, the insurance they signed me up for just covered my burial if I died. Now, in 2022, things have changed in the world of life insurance. For example, many insurance companies are allowing people to pay for education, save for retirement, and have access to their funds before they die.
While it may be a surprise, most parents do not save money for college. This is mainly because they feel their child will get a scholarship or get student loans. In fact, most parents are only worried about how they will provide food, shelter, and clothes for their kids. Unfortunately, most people live for today and not for the future.
The first step to understanding how you can save on paying for college is knowing what an Index Universal Life policy is. Here is some information about it:
- Age: 0-50
- Good for a tax-free retirement
- Helps reduce college expenses for your kids
- You can accumulate more cash than insurance.
- You can borrow money and use it for whatever you want
- It allows you to get the upside of the stock market, but not lose what you have gained
A few years ago, some insurance companies allowed normal people to have access to this product. Before, the only people who had access to this were athletes, doctors, lawyers, or people with a certain income. I personally have one for retirement purposes. In fact, I put a certain amount of money each month and can add more money to it, take loans out after a period of time, and use the funds if I become ill. Many of my clients sign up for this when their child or grandchild is born.
How does it work?
| What you WANT | IUL | IUL |
| Safety | YES! | Guaranteed minimum interest rate of at least 3% |
| Tax -Free | YES! | Through using policy loans and making sure the policy is current/ does not expire (IRS code 7702) |
| Good growth | YES! | Past average annual returns of 6-8% |
| Liquidation | YES! | If there is cash value, you have access (no10% penalty for taking money prior to the age 59 and ½) |
What is the catch?
- You must qualify medically
- You need 10-20 years to let the cash value grow depending on the plan
- There is a limit on the annual interest growth rate
- Insurance charges (they are still considerably less than tax charges)
As I mentioned before, it is a great vessel for retirement. Look at the example below:
30 yr. old male, non-smoker, $500,000 at retirement (age 65)
|
Tax-Deferred (IRA, 401k, etc.)
|
Tax-Free IUL
|
|
| Beginning Balance | $500,000 | $500,000 |
| Taxes (28%) | $140,000 | $0 |
| Remaining Balance | $360,000 | $500,000 |
| Est. Lifetime income/yr.
@ 65 to age 120
|
$34,788 | $34,788 |
| Income will last | 10 years and 4 months | LIFETIME |
| Est. Total income in retirement @ age | $360,000 @ age 75
$0 @ age 79 $0 @ age 89
|
$382,668 @ age 75
$521,820 @ age 79 $869,700 @ age 89
|
| Est. Tax-Free death
benefit @ age
|
$0 @ age 75
$0 @ age 79 $0 @ age 89
|
$393,858 @ age 75
$305,743 @ age 79 $90,832 @ age 89
|
To you get your own custom illustration for your child, grandchild, or retirement, click the link to schedule a time with me: https://www.thefinanciallady.com/book-me/
Be aware, be informed!