What is the Main Advantage to Using Indexed Universal Life?

One of the main advantages of using IULs is that the cash value is protected from dips in the market. In an IUL, the investments are not placed directly in the market where they would be subject to a loss. Instead, they are put into a strategy that mirrors an index like the S&P 500, which allows the client to get all or most of the gains in the market. The gains are then locked in to protect against potential losses.

Who Uses Life Insurance for Retirement Planning?

For example, Jim Harbaugh, the University of Michigan’s head coach, uses life insurance for his retirement. The university has helped Harbaugh become the top-paid college football coach in the nation. An IUL was used to save millions in tax-free retirement. This was possible because the growth of the cash value inside of the policy increased Harbaugh’s retirement funds, which he can receive tax-free at the age of 70. When he was hired at Michigan, Jim entered a split-dollar loan agreement, in which the premium, cash value, and death benefit are split between two parties. This split-dollar agreement was funded by an IUL. Under the split-dollar agreement, the University of Michigan agreed to pay seven $2 million loan advances into a life insurance policy. Harbaugh does not have to pay back the loan taken on the policy until his death, and his beneficiaries will receive the remainder of the death benefit. While he is alive, Jim is able to borrow money out of the policy tax-free. Through this plan, it is projected that he could begin taking $1.4 million per year out of the policy tax-free, beginning at the age of 66.

Why is using life insurance for retirement planning a good idea?

The top three things that make IUL insurance a strong tool for retirement are as follows.

1. It protects against market losses
2. It can produce tax-free retirement income
3. Its ability to pursue slightly more aggressive returns regardless of age

Where is the Best Place to Learn about Using Life Insurance for Retirement Planning?

The best place to learn about using life insurance for retirement planning is right here through the sales directors at Pinnacle Financial Services. We can discuss using life insurance for retirement planning, and have great companies that can offer an IUL for your client or even yourself.

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