IUL education

Indexed Universal Life (IUL) policies have become popular because they offer a mix of life insurance protection and investment growth potential with downside protection. Here’s why they’re all the rage:

IULs are tied to stock market indexes (like the S&P 500), so policyholders can benefit from market gains. However, they don’t actually invest in the market, meaning they avoid direct losses when the market drops. Many IULs have a zero or minimum floor, so even if the market tanks, the policyholder doesn’t lose money.

IULs allow policyholders to take out loans against their cash value without triggering taxes (if structured properly). This makes them attractive as a tax-free income stream in retirement, especially for high-income earners looking to reduce tax burdens.

Unlike whole life insurance, IULs offer flexibility in premium payments. You can adjust contributions based on your financial situation, making it easier to maintain the policy long-term.

Many IULs now come with accelerated benefits for chronic, critical, or terminal illness. This means policyholders can access their death benefit while alive if they have a qualifying condition, making them a life insurance + financial security hybrid.

Because death benefits from life insurance are generally income tax-free, IULs are often used in estate planning to preserve wealth and ensure tax-efficient transfers to heirs.

Many people are concerned about stock market volatility and taxes on traditional retirement accounts. IULs provide an alternative way to accumulate wealth while avoiding market crashes and required minimum distributions (RMDs) that come with 401(k)s and IRAs.

• IULs can have caps and participation rates that limit gains from market upswings.
• They require proper structuring to avoid high fees and policy lapses.
• Overfunding is key—if you only pay minimum premiums, you might not build enough cash value to sustain the policy long-term.

Yes! Some people use Indexed Universal Life (IUL) policies as a "private bank"—often called the Infinite Banking Concept (IBC) or Be Your Own Bank (BYOB). Here’s how it works:

1. Builds Cash Value – Your premium payments grow a tax-deferred cash value, similar to how a savings account accumulates interest.
2. Access Tax-Free Loans – Instead of withdrawing money (which can trigger taxes or penalties), you borrow against your cash value while still earning interest on the full amount.
3. No Credit Checks or Loan Approvals – Since you’re borrowing from yourself, there are no bank approvals or credit score requirements.
4. Pays You Instead of a Bank – Instead of paying interest to a bank, you pay it back into your policy, keeping the wealth in your control.
5. Grows Even When Borrowed – Your cash value continues to earn indexed interest even when you take out a loan, compounding your wealth.

✅ Higher Growth Potential – IULs can grow at 5-9% (depending on caps and participation rates), whereas traditional savings accounts barely hit 1-2%.
✅ Tax-Free Wealth Strategy – Unlike taxable interest in a bank, IULs allow for tax-free access through policy loans.
✅ Protection from Market Losses – Unlike traditional investments, an IUL’s zero-floor guarantee ensures your money is safe even if the market crashes.
✅ Liquidity & Flexibility – You can access funds without penalties or early withdrawal fees (unlike IRAs, 401(k)s, etc.).

• It’s not instant liquidity. Unlike a regular checking account, IULs take time to build up cash value.
• Overfunding is key. If you don’t put enough premium in early on, you won’t have much to borrow from later.
• Policy costs can eat into returns. Fees and insurance costs must be managed properly.

Many high-income earners and business owners use IULs as a strategic financial tool instead of traditional banking. Would you like to position this as a strategy for your clients?