Indexed Universal Life sales are one of 2 life insurance products which have increased each year of the recent recession. This market is growing by an average of 30% annually over the past 10 years. IUL now represents 30% of total universal life premiums. In addition to the reasons stated above, it is well-suited to a low interest rate environment. Clients like to not actively manage their investments inside their life insurance plan. They like to set it and not sweat it. With IUL, you can have a combination of buckets to choose from and they are so diverse, that safety emerges. Returns range from 0% on the downside, to 13% on the upside potential. With the Variable Universal Life, you are entirely responsible for the investment choices and results.
IUL can be advantageous as an accumulation product. In times of uncertainty with retirement planning and taxation, IUL can be maximum-funded, allowing cash values to build up within it, tax deferred. Cash values may be accessed without the type of tax penalties a client would incur for IRA distributions (prior to age 59.5), subject to applicable surrender charges. Flexibility in premium payments and policy loans which self-complete upon a premature death. It would provide that critical, lump-sum, income tax-free death benefit to beneficiaries. The bottom line is that, if the IUL policy is managed strategically and kept in-force, its build-up and death benefit proceeds may fall into the coveted "never taxed" column. People have been seeking alternatives through which they can create tax-deferred growth and tax-efficient distribution. Investments can be in the S&P 500 or Global Broad Market Indexed small-mid cap funds.
Keeping in mind, we don't know what theoretically Chelsea Clinton will do in her 2nd term of office. In 30 years from now...will Social Security be solvent, is there means testing for Social Security, are income taxes for seniors calculated differently, etc. Studies show that many people have a fear of outliving their assets. Indexed Universal Life may play a pivotal role as a solution that can ensure a stream of income for their entire life beginning at retirement. After all, guaranteed income streams accessible for life has become a bigger priority than legacy planning this decade.
You are advised to consult with your tax advisor for more information regarding your specific situation. Just let me know how I can help you prepare for your priorities.
Jeanine Kinzie - Licensed Health and Life Insurance Agent
Great Lakes Insurance And Financial Services Agency, LLC