(Related: Tools For Doing More Life Business in 2019)
As with any trend, there are reasons to back it up. IUL is the fastest growing individual life insurance product. LIMRA shows 2018 second quarter growth at 23%. In its simplest form, it is a universal life product supported by the cash value that is credited by the index it is tied to and the deposits the client funds it with. By far, the most common index is the S&P 500.
The other information that helps with the positioning idea I am about to share is that there is a cap and a floor associated with the product meant to share in the upside of the index and limit the downside in years the index has a negative return. So, based on this knowledge here is how to position this as a product to help when planning for retirement.
The key is to position IUL to be used for a portion of the client’s retirement plan, not all of the plan.
IRAs, 401k’s and other qualified plans should certainly be considered for use as accumulation vehicles. They have the advantage of potentially being tax-deductible when contributions are made, but there is a limit as to how much can be placed in them.
2. Tax Deferral
Assets in both the qualified plan and the IUL grow tax-deferred