Because IULs offer IRS approved tax-advantaged savings and are funded with after-tax dollars, taxes are paid on the “seed” rather than the “harvest” leaving people with more money when they retire and when they are not working and need to make the most efficient use of their resources. According to a Fox Business news article featuring “… the financial industry’s No.1 secret – Indexed Universal Life (IUL)” – this is not just a good idea … It’s a great idea! (see Fox Business, news article by Scott Mann, Feb. 22, 2012).
Savings and investments are backed by the full faith and credit of the issuing company. Insurance companies are required by law to have 100% or more, of all liabilities covered by the company’s assets. IULs are offered by some of the oldest, largest and most financially stable institutions in the world.
Good things are happening. The Wall Street Journal (June 5, 2010) said IULs are “This year’s hottest life-insurance product … well-suited to an era of sudden ‘flash crashes’ and overall uncertainty: it appeals to people eager to capture stock-market gains while avoiding undue risk.”
Savings can be accessed prior to age 59.5 without penalty and if structured properly can be taken out “tax-free.” Preferred loans are available through the insurance carrier and backed by the policy’s account value thus creating a tax-free living benefit.
Death benefits are paid out to a policy holder’s beneficiaries tax-free.
Assets / investment returns are linked to indices such as the S&P 500 index which is based on the market capitalizations of 500 large companies. It is widely regarded as the best single gauge of large-cap U.S. equities.
IULs offer an option to those who would like to save for the future without the risk – where their principle and interest gains are annually locked in and are contractually protected against any losses.