2 Investors Who Can Benefit From Indexed Universal Life Insurance Policies
Numerous investments on the market will allow you to save for your future. Few will offer you tax-deferred returns on your stock investments and allow you to cash out at any point. But if you also desire life insurance coverage, you need to consider an indexed universal life policy. While these policies are not for everyone, they meet the objectives of many kinds of investors. Here are a few types of investors who benefit from adding this policy to their portfolios.
1. Investors Looking For Tax-Deferred Growth
There is a saying that the only guaranteed things in life are death and taxes. While you may be unable to avoid death, an Indexed Universal Life insurance (IUL) policy can help you avoid certain taxes.
You pay the premiums of an IUL policy with after-tax monies. Because of this, your investment grows tax-free. Even better is the fact that no taxes are due on your distributions from your cash value. No taxes on your distributions means you don't have to worry about how much the government will take from your retirement income.
Tax-free growth is opposed to tax-deferred growth. An example of tax-deferred growth is your 401(k) and IRA. While your investments in these accounts grow tax-free, taxes are due when you begin to withdraw your assets.
The insurance company will also pay the death benefit of your IUL Policy to your beneficiary without triggering income or estate taxes. As long as you have a living beneficiary, the proceeds will also not have to go through probate.
2. Investors Looking For Flexibility
Indexed universal life insurance policies offer a lot of flexibility. As an investor, you can create the perfect policy that works for you and your family.
Although your IUL policy is tied to the stock market, you will still decide how much risk you take in the market. You do this by determining the allocation of your funds between the fixed and equity subaccounts offered within your policy.
You can adjust your premium payments and the face value of your death benefit. You can also add additional riders to create a policy that meets all your needs.
IUL policies also offer flexibility as to when you begin to receive distributions. Unlike a 401(k) or IRA dictating the minimum age you can receive an allotment with a penalty, an IUL policy allows distributions at any age. There are also no minimum distributions of the cash value for this type of policy.
Speak to a financial advisor for additional benefits of indexed universal life insurance. It may be the investment your portfolio needs.
For more information about indexed universal life insurance, contact a local company.