*This is not tax advice. Please consult your tax professional for your specific situation.
You pay taxes on your income. Why pay more than you need to?
Consider for a moment what “tax deferred” really does to your money.
Instead of paying taxes on it now, you pay taxes on it later.
Do you think taxes will go up or down in the coming years?
If they do go up, you could end up paying more taxes on that money later.
What if you could put money in a special “fortress” that allows you to invest your after-tax dollars, watch it grow, and then take it out TAX FREE (If structured properly)?
This “fortress” is an Index Universal Life policy.
Now remember, to use this special fortress, you will need to be educated on how to use it. It is not something you set up and forget about. (If you want something that runs on autopilot, consider a “Guaranteed Universal Life” policy. You will have less potential for increase, but you won’t have to attend to it as much)
You must have a “relationship” with your Index Universal Life fortress, which means to go over it with your trusted advisor at least once per year AND each time you take money out of it.
That being said, if it is properly nurtured and handled correctly, an Index Universal Life policy can not only give you and your family life insurance coverage, it can serve as a vehicle to build wealth safely and free of taxes*
*Tax-free income is obtained by taking out loans from the policy. The policy can be structured for you to borrow a consistent amount each year. Even though you would be borrowing from the policy, the original amount is still earning interest (we will talk about that!). We would go over your policy each year to assure that your policy will last as long as you do.
The “Index” refers to an index fund such as the S&P 500 or Dow Jones.
Now picture this…you are healthy and are not close to retirement. You own an Index Universal Life policy with a value of $100,000 and it is connected with the S&P 500. Great! You are ready to build your wealth in tandem with the S&P 500.
Why not take a look at the history of that index fund since 1950?
Yes, it goes up and down. You can see it went down during 911, then during the housing crisis. Nervous?
Wouldn’t it be nice if you could only stay the same or gain?
What if you could not lose, just win?
That’s a special feature of Index Universal Life.
In most index crediting strategies (but not all), insurance companies have a “cap” on what you can make. Let’s say that cap is 13%.
This means that if the S&P 500 goes up 18%, your funds will be credited at 13%, and if the market drops 1%, 10%, 30%, etc, you will not lose money.
Let’s look at your $100,000 in this fund. The market has a down year and drops 20%.
This leaves a non-protected investor with $80,000. The market has to regain 25% in the following year to get back to where they were two years before.
But YOU have your money in Indexed Universal Life, You lost nothing. 0%. You will start earning money as soon as the market starts to improve.
No loss, only gain. Tax free*. That’s good.
Yes, it’s not for everyone. Some people want the guarantees of a Guaranteed Universal Life policy. Some people want to play the stock market. What is your preference?
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