Indexed Universal Life Insurance PageWelcome to Indexed Universal LifeWhat is IUL?IUL, or indexed universal life insurance, is a type of permanent life insurance policy that offers death benefit protection for the remainder of your lifetime, as well as a cash value component that provides you with the opportunity for higher returnsThe IUL PolicyIn many ways, indexed universal life insurance is similar to traditional universal life, except IUL uses a different crediting method to determine the interest that accumulates in the cash-value component of the policyPros and Cons of Indexed Universal LifePros Opportunity to obtain market-linked returns Protection of principal Tax-deferred accumulation Tax-free access to the cash value Flexibility No annual maximum contribution limits Permanent death benefit protectionCons Complexity Charges Fees Surrender charges Limited upside growth No payout of dividendsTax Benefits of IUL Policies Tax-Deferred Growth The funds inside an IUL policys cash value are allowed to grow tax-deferred. This means that there is no tax due on these gains unless or until the funds are withdrawn. Tax-Free Access to Cash Value IUL policyholders may be able to access funds from the cash value component tax-free by taking certain types of loans. No Annual Maximum Contribution Limits Unlike qualified retirement plans or traditional IRAs, there is no annual maximum contribution limit with an IUL policy. This means that additional funds can be contributed that allow for tax-advantaged growth.
