3 Ways to Position Indexed Universal Life

Therefore, the IUL is best utilized when the client has exhausted their tax-deductible contributions so is looking for other options to put away more money and receive tax favorable treatment. In this case, tax deferred growth and a method to take money out with no taxes.

3. IUL’s Caps and Floors Benefits as Product Features

Your presentation is showing clients an actual history of the S&P 500 and have them pick a 20-year period to represent their retirement time frame. Point out the negative years and ask them which of their accounts they would draw from as a source of income. A brokerage or investment account that is down represents using money that is at a loss. If that account is qualified not only is it down, but they need to withdraw more to cover the taxes owed to receive the same net income.

What if part of your income money source has a floor, even 0%, so there is no negative loss and you could withdraw that income tax-free while waiting for the market to turn positive and then have the “choice” to go back to their other sources? Years you don’t use it provide the opportunity to participate in the upside of the index it is tied to.

This is the case for clients to put some of their money in an IUL product. From there, they can leverage the death benefit, tax-free transfer to beneficiaries and other benefits, such as riders tied to life insurance. It’s this flexibility that has a strong appeal to clients. It gives them choices for exercising control over their financial situation.

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Anthony O’Kussick, CLU, is director of sales support & operations at First American Insurance Underwriters Inc., of Needham, Massachusetts, a wholesale life insurance, annuities, long-term care and disability income agency. Contact him .