how to buy iul insurance?

It is easy to see the advantages that cash value permanent life insurance provides, including sheltering income from stock market losses, tax-free retirement income, and death benefit protection. But when it comes time to fund the policy, most people worry about where they will get the money. In this episode of Money Script Monday, Marcus points out 3 areas of your financial portfolio you should consider diversifying to help fund an Indexed Universal Life policy.

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Hello. My name is Marcus Kiel. Welcome to another episode of Money Script Monday.

Today, we're going to be covering three ways to fund an IUL.

Now, when I was an agent and I looked to find funds to sell cash value permanent life insurance to clients that needed it, the clients would say, "I don't have the money. I don't have the savings. Where am I going to find the money?"

By using a fact finder and working with the client we were able to find ways where we can find additional funds to put into an IUL.

These are some of the three main ways that I found, and that you may find as well, to purchase an IUL product, indexed universal life product.

So, let's get started.

The first way is pay down debts.

If you have a home and you're paying a 15-year mortgage versus a 30-year mortgage, an option could be to stretch out the period to a 30-year, low-interest rate and then use those funds to pay off some debts.

That includes your car loan or your high-interest credit cards.

By paying off those debts, you free up funds to use to supplement your retirement with an IUL.

So, it doesn't mean to go and live lavishly off the newfound money that you've found.

Also, another option is, if you're paying above your loan on the house and making extra principal payments, you're going to end up paying off early one of your biggest tax breaks.

That's the mortgage interest from your house. And so, why not stretch that out?

It's your biggest tax break. Stretch that out, use those extra funds that you're using to pay off the home early, and then purchasing an IUL to supplement your retirement and cover your death benefit needs.

And so, that's the first way to pay down debts to free up funds to purchase an IUL.

The second way is using your 401(k). Most of you have a 401(k) out there. You're using it for retirement funding it in now.

The good news is that companies pay a match. It could be 3%. It could be 5%. It could be 6% or more.

My philosophy is that you want to pay to the match. It's free money.

But paying above that into a tax-deferred which does not equal tax-free vehicle, it may be wiser to put those funds in an IUL.

Secondly, there's stock market volatility.

If you're young and you have plenty of time, you can sustain stock market losses because you have time for the market to recover again before retirement.

But, if you're more mature, wiser and you're closing in on retirement and the stock market goes down, you don't have that market recovery time to build back up.

So, looking at a 401(k), yes, it does grow tax-deferred but when you start to take out funds, income, to supplement your retirement, there's going to be a tax bill.

And so, we don't know what it is. And right now we're at historic lows, but it could be substantially higher.

Tax-deferred does not equal tax-free. Freeing up those funds, if you're paying above a match and putting it into an IUL, is a wise decision.

The third way is looking at your taxable accounts. These are the least efficient tax vehicles.

You earn taxable interest. So there's interest on the tax that you earn, the reinvested dividends, you're taxed on that, and then you're taxed on distributions.

It could be capital gains, it could be a tax on your income as well.

These taxable accounts are the least tax-efficient vehicles. We want diversification.

So, instead of putting all your eggs in one taxable account bracket, why not put some of those funds in a tax-free bracket?

And that's the indexed universal life.

To review, three ways to fund. We have paying down debts to free up funds, using your house to pay off the debts and then with that surplus of funds, paying for an IUL.

We have your 401k. If you're paying above the match, it may be wiser to put those funds in a tax-free vehicle that grows tax-deferred, but is tax-free upon taking out funds instead of just growing tax-deferred.

And then, lastly, your taxable accounts where you're taxed in various ways.

Let's look at an IUL. This lock here is for, as we know, the IUL, the power of indexing tied to the market, not in the market.

Very simple there. The zero can still be your hero on your traditional IUL products.

Now, the newer products, some have a high bonus, high multiplier, high asset fee charge.

Zero wouldn't be your hero there. It would be more like negative five or negative six.

But with the traditional IUL, zero can still be your hero, or a conservative IUL with a larger bonus may be negative one.

But keeping that zero protects you from stock market volatility.

There's no market recovery, so in a down market, you're locked in at zero on a traditional product and then you don't have to worry about your funds, stock market goes down, coming back up to level and it's actually a little bit more to gain your original funds back.

If you're an IUL, you're zero, no market recovery resets.

If there's a positive index credit year, you go up from that level, from that horizontal level instead of worrying about market recovery.

And then, lastly, the beauty of an IUL once again, it's not an investment. We're using this in case something happens to you or your family members, will they be covered.

There's always a death benefit attached. It's not an investment, but there is tax-free liquidity.

As long as the policy is in force and there is cash value, you can take out funds, income tax-free. And so, that's the beauty of an IUL.

Lastly, in case of a chronic illness or maybe a critical illness or terminal illness, an IUL can be used to cover those costs as you mature in age if you were to have any kind of serious health risk.

Check out my article in "Broker World" about will you outlive your money? How an IUL is different from other financial vehicles.

By the way, it can pay for your needs if you become chronically ill.

That's all the time I have for today. Hopefully, you found three ways to fund your IUL.

Please check with your local financial advisor to see if an IUL product fits your needs. I'm Marcus Kiel. Thanks for watching.

Universal Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods. This certificate could lose money. WoodmenLife will provide notification if the guaranteed monthly deductions and interests are expected to exhaust the plan’s cash values prior to the maturity date. This certificate is not guaranteed to stay in force until maturity based on minimum guarantees.

All products may not be available in all states.

Flexible Premiums Adjustable Indexed Life Certificates ICC18 8730 4-18, 8730 4-18 (XX). Rider Forms: ICC18 8731 4-18, 8731 4-18 (XX), 257 6-10 (XX), O-257 6-10 (XX).

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