• Life Insurance

What is an IUL

Indexed Universal Life Insurance

Indexed universal life, or IUL, insurance is a type of life insurance that can offer financial security and flexibility. With an IUL, you have the potential to take advantage of stock market returns, without your principal being at risk. Additionally, the interest earned is tax-deferred, and goes to your beneficiaries as a tax-free death benefit.

Instead of growing based on a fixed interest rate, an IUL’s interest is based on the performance of a market index. In contrast to actually investing in the market, however, you won’t lose money if your index loses value. This is because an IUL comes with a guarantee* to protect your principal.

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Different Types of Universal Life Insurance

Several types of universal life insurance exist.

For example: fixed universal life insurance, variable rate universal life insurance, or indexed universal life insurance, as we’ve already discussed. An IUL policy offers certain advantages over the other types of life insurance available. An IUL might be a good option if you’re looking for a policy focused on flexibility and high growth potential. Is an IUL the right choice for you? Dotson Financial can help you explore your options. Contact us to learn more.

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How Indexed Universal Life Insurance Works

Premiums cover a portion of the cost based on the life expectancy of the insured. Cash value is then added to the rest. Your money may also earn indexed interest, The cash value is credited with interest based on increases in the index. Some policies allow you to select more than just one index. This offers further flexibility when it comes to your IUL. There are several options when it comes to IULs, and how they may be able to help you financially in retirement.

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IUL Benefits

Insurance companies protect your money against loss. An IUL is linked to an index, but the money you contribute is not directly invested in the market. Your money won’t be affected if the market falls.

An IUL follows different tax laws than traditional retirement accounts. And, IULs don’t come with annual contribution limits like 401(k)s or IRAs. You can also withdraw money from an IUL at any time, with no penalty. Another benefit? It also doesn’t have required minimum distributions (RMDs) at age 72. And, if you need it to pay for long-term care, you can access the IUL’s death benefit while you’re still alive.

After you pass away, your family will receive a death benefit from the IUL. The death benefit may increase over time, depending on how the index performs. Beneficiaries typically receive more than initial contributions. And, the death benefit doesn’t go through probate.

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*Backed by the claims paying ability of the carrier.
**Our products offer a reasonable rate of return, over time.

*Proceeds from an insurance policy are generally income-tax-free, and if properly structured, may also be free from estate tax. Income-tax-free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans. Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce the death benefit, or cause the policy to lapse. This assumes the policy qualifies as life insurance and is not a modified endowment contract. The Host and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. This content is not intended to serve as the basis for any investment or purchasing decisions, nor does it recommend or involve the purchase, holding, or sale of a security.  All figures herein are hypothetical and for illustrative purposes only to explain general concepts.  No figure is to be relied upon as being accurate nor a guarantee or projection and is meant only as a partial overview of some relevant features and benefits of general insurance products that may be in the marketplace, and whose availability will be dependent on the State of residence of the consumer, and their individual suitability for the product they are wanting to purchase. Where insurance products are mentioned, any and all guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

IMPORTANT CONSUMER INFORMATION

Gibbs Wealth Management, LLC (“Gibbs”) is an SEC registered investment adviser, and Investment Advisory services are offered through Gibbs D/B/A Dotson Financial Group. Insurance products and services are offered through Dotson Financial Group. By using this website, you accept our Terms of Use and Privacy Policy. Gibbs’ investment advisory services are available only to residents of the United States in jurisdictions where Gibbs is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Any historical returns, expected returns, or probability projections are hypothetical in nature and may not reflect actual future performance. Account holdings are for illustrative purposes only and are not investment recommendations. The content on this website does not constitute a complete description of Gibbs’ investment advisory services. Before investing, consider your investment objectives and Gibbs’ fees. Gibbs is not a bank or depository institution licensed in any jurisdiction. GWM and GFG are affiliated companies. Products offered by Gibbs are Not FDIC Insured, Not Bank Guaranteed, and May Lose Value. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

This site is for informational purposes only and is not intended to be a solicitation for or offering of any product or investment. The offer for sale of an insurance product may only be conducted in a state where the agent is licensed and the product is approved for sale. The providing of investment advice relating to securities may only be done by a properly licensed individual operating through a licensed affiliate entity, unless otherwise exempt. Comments about past performance are not to be construed as a guarantee or assurance of future performance. This website may contain concepts that have legal, accounting and tax implications. We do not provide specific legal or tax advice, nor promote, market or recommend any tax plan or arrangement. Consult a tax/legal professional for guidance with your individual situation. No representations are made as to the accuracy or completeness of the information contained herein or any information contained in any link provided herein, nor does a consumer visiting the website create an agent-client relationship.

By contacting Pete Dotson MI Ins Lic# MI 0278432/Dotson Financial you may be offered information regarding the purchase of insurance products, including fixed index annuities and life.

CPD Investments, Inc. DBA Dotson Financial Group.

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