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Life Health > Life Insurance

The life insurance strategy both U.S. and Foreign National clients might want

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Diversification is one of the guiding principles of financial planning to help mitigate risk. No single asset class or market performs best in all economic environments.  If financial planners diversify a customer’s investment portfolio, why wouldn’t that same principle carry over to managing a client’s life insurance and supplemental retirement assets? 

Financial planners may be looking to Index Universal Life (IUL) insurance as a solution to meet many client needs: death benefit protection, tax advantaged cash accumulation and living benefits.  Some Index Universal Life policies offer index interest crediting based on a diverse mix of market indexes, including global indexes. Financial planners like the versatility of this IUL feature to help them round out a client’s overall financial plans.

Tax-deferred cash value and earned interest:

The popularity of the index universal life policy attests to the versatility of life insurance. Provided there is sufficient cash value, a policy owner may take tax-free loans and withdrawals, while still providing a death benefit legacy to their loved ones. (Note that loans and withdrawal will reduce the death benefit and if a policy lapses with a loan outstanding, taxes may be due.) 

Any index interest is based, in part, on changes in specified market indexes.  Generally, the crediting methodology involves a cap and/or participation rate, established by the insurance company, which determines the maximum rate of interest that may be credited. The insurance company also determines a minimum guaranteed interest rate, or floor.

While changes in the value of an index are used as part of the interest-rate calculation, an IUL is not an investment in the equities market. The interest crediting rate will never be lower than the policy’s floor. So, even if the index has declined during the interest rate period, the index accounts do not lose money as a result. Here’s another benefit to a cash value life insurance policy: The cash value accumulates tax-deferred. There are no taxes on any gains in the policy during years in which they are earned or while they remain in the policy. And they may be accessed income-tax-free through withdrawals, up to the cost basis, or through loans.   

International client opportunities:

In addition to U.S. citizens that see the value in index universal life insurance to help protect their families with a federal income tax-free death benefit and the potential to accumulate cash value for living benefits, foreign nationals are interested in the same strategy. Many foreign nationals want to own financial products issued by U.S. companies, in addition to assets in their home county. Foreign nationals may value not only the death benefit an IUL product can provide, but also the diverse mix of index accounts that the interest is based upon. The flexibility of being able to select index accounts in which interest is based on global indexes fits nicely with the diversification strategy their planners implement with their other assets. Some foreign nationals may seek out global index strategies based on their comfort level with the major index from their home country. 

These are just some of the ways an IUL can provide an additional safety net from taxes and down markets, for both US citizens and foreign nationals, while protecting families and helping clients achieve their financial goals. 

To learn more about foreign national planning with IUL, please visit and watch the case study video profile of Mr. Li and have the opportunity to earn a 10% commission enhancement on your next Transamerica IUL case.

OLA  2376 1115 


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