Summerlin Benefits Consulting Q&AAnswer
Jan 23, 2024 - 06:47 AM
IUL can be a good option for someone who would like to make annual premium deposits for a set number of years (usually 5 to 7 years) with the intention of letting it grow untouched for a while, usually 10-12 years, so that they can then use it later in life to supplement other income streams, fund services like long term care, or leave a legacy fund to beneficiaries. The biggest attribute of an IUL policy and it's cash value is that the money will grow tax-free; one example of a client who might like this as a financial vehicle would be someone who has reached an age where they have to take RMD's from their other qualified retirement plans but they dont necessarily need the RMD money now. In this example, when you pull your RMD, you have to pay taxes on that money, and these individuals dont usually want to reinvest the RMD into an environment where additional tax might apply later. If they chose an IUL, they can pay those funds into the IUL policy as an annual premium payment, acquire some life insurance for their loved ones, and grow the cash value from their deposits in a tax-free environment. Then, if and when they need to draw against it in the future, there will be no additional taxation; in short, an IUL could be ideal for someone whom is able and willing to take a long term approach to growth and is looking for tax-free interest. There will likely be some health underwriting involved, so the client's health status and other financial circumstances should also be considered to determine if this vehicle may be right for you.
