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Wealth Without Risk: The Top 5 Living Benefits Of Indexed Universal Life Insurance

April 16, 2012 | Comments: 0 | Views: 80

Back in 2008 when the stock market dropped by 37% and the market value of Real Estate dropped by 18% from the previous year, I was wondering what I could have done to avoid being involved in that nightmare. After sharing my "tales of woe" with friends, I was referred to a financial planner who offered free training on how to overcome the brutal effects of the economy. I was happy to learn that there were still ways to build wealth without risk. The most exciting method of building wealth with financial security, that he taught me about, was through what most people don't find very exciting; Life Insurance. He taught me that although the most important benefit of owning a life insurance policy was the Death Benefit, there are many benefits to be had while we are still alive. I was truly amazed about one of the types of Life Insurance that seemed to offer everything I needed to start changing my financial situation..... Indexed Universal Life Insurance (IUL). Needless to say, I not only became a client who purchased an IUL, but I also became a licensed Life & Health Insurance Agent. I was on my way to building wealth without risk.

There are many Living Benefits available with an IUL policy. I will highlight what I consider to be the top 5.

1.) Tax Free Retirement - If you are depending on a 401k alone to provide your retirement funding, you are missing out on the safety and flexibility found in an IUL. If you decide to retire before you are 59 1/2 years old, you can access your savings from your IUL without having to pay a penalty or income tax as you would with your 401k. In the last stock market crash in 2008, you would have been very disappointed if you were just about ready to retire when the market dropped, and your 401k bit the dust. Those who were using an IUL as their retirement vehicle, would not have suffered any loss, and could have retired on schedule. They would have preserved their wealth without risk.

2.) College Funding - An IUL is a superior method of saving for college when compared to the popular Section 529 College Savings Plan. Both plans grow tax-deferred and allow tax-free withdrawals. However, with the death benefit provided by the IUL, you have the full funding there for you in the event of the death of the insured. You would have preserved your wealth without risk. An IUL has liquidity that you won't get with the 529 plan, as you can use money saved in an IUL for college tuition, or any other purpose, while money withdrawn from the 529 for non-college usage is subject to a 10% penalty, and the earnings will be taxed as income.

3.) Protection From Law-Suits - In many, but not all states, the cash value of your IUL policy is protected from law suits. This is a great benefit for people such as physicians who are constantly at risk of being sued for mal-practice.

4.) Access Savings Tax-Free With No Penalty - With an IUL you have no worries about paying income tax on money taken out via a policy loan. In addition, you are not required to repay the loan as it will simply be taken from the death benefit, if not repaid. This gives you total control over what money will be taxable, depending upon your needs and circumstances.

5.) Strong Growth Potential - Here is an example of how your money will grow in an IUL to help you gain wealth without risk.The insurance company uses a small amount of your premium to purchase options on the S&P 500 index. These options typically have a 0% floor and a 13% cap on earnings, meaning that the account value is protected from market loss, but can still earn up to 13% per year when the market goes up. At the end of the year, if the market has gone up 11%, your account also grows by 11%, and the new value of the policy is locked in and will never decrease for any reason. If the market goes up 15% your account value grows up to the cap of 13%. If the market has lost 15%, your account does not decrease. The 0% or 1% floor gives you protection from market loss. This protection is the trade-off for the cap on growth, giving you financial security as well as potential growth. As you can see from this example, when the S&P is doing well, so will the growth of your IUL.

There are many more living benefits to be gained from owning an IUL, besides my choices for the top five. I urge you to further explore IUL's as an ideal savings vehicle that will brighten your financial future and help you gain wealth without risk. More information is available now by going to Planting Seeds of Wealth.

Source: EzineArticles
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