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FREQUENTLY ASKED QUESTIONS
LIFE IS UNPREDICTABLE! What if tomorrow never comes?
- Parents, have you thought about who will take care of your family if you’re no longer around?
- And young adults, what if you’re laid off tomorrow or fall ill and can’t work? How will you cover your mortgage, car loans, or other expenses?
It’s a tough question to face, but it’s something we all need to consider.
We have heard many heartbreaking stories about families who lost a loved one, leaving them financially and emotionally devastated due to a lack of life insurance. Without any savings plans, we’d leave ourselves and our loved ones vulnerable and financially unprepared.
Only 15 minutes FREE CONSULTATION will change your future.
Ask yourself, "Is anyone financially dependent on you?" While you might not have a spouse, consider if other family members rely on you financially.
Even without dependents, life insurance includes the Accelerated Benefit Riders (ABRs) which allow policyholders to access a portion up to 80%+ of the death benefit while they are still alive under specific circumstances, typically related to serious illness or injury, it can cover debts, taxes, and living expenses.
Think ahead: What if you fall ill and cannot go to work anymore? How will you pay for all your living expenses, including mortgage and car loans? Additionally, if you get married or have children in the future, buying coverage now can lock in lower premium rates while you're young and healthy, as rates increase with age and health issues.
Indexed Universal Life (IUL) Insurance is a type of permanent life insurance that offers living benefit, tax benefit and a death benefit along with the potential to accumulate cash value based on the performance of a specified stock market index, such as the S&P 500.
WHICH INSURANCE COMPANIES DOES YOUR COMPANY COOPERATE WITH? AND HOW LONG HAVE THEY BEEN ESTABLISHED?
We work with:
1. National Life Insurance Group, which has been established since 1848 (more than 170 years)
2. Columbus Life Insurance Company, which has been established since 1906 (more than 115 years)
3. Symetra Company, which has been established since 1957 (more than 65 years)
Tax-deferred Growth: Like 401(k) and IRA, the cash value growth in an IUL is tax-deferred.
Tax-free Loans: You can take out loans against the policy's cash value tax-free, whereas 401(k) and traditional IRA withdrawals are taxed as ordinary income.
Tax-free Death Benefit: The death benefit from an IUL is generally tax-free to beneficiaries, unlike the taxed withdrawals from 401(k) and traditional IRA accounts.
No Required Minimum Distributions (RMDs): Unlike traditional IRAs and 401(k)s, which require minimum distributions starting at age 73, IULs do not have RMDs, allowing the cash value to grow uninterrupted.
Market-Linked Growth: IULs offer potential returns linked to a stock market index without directly investing in the market, providing upside potential with downside protection (typically through a zero percent floor).
No Contribution Limits: Unlike 401(k) and IRAs, which have annual contribution limits, IULs do not have contribution limits, allowing for greater flexibility in funding.
Index Crediting Methods: Various index crediting methods (point-to-point, annual reset) can provide tailored growth strategies that can outperform the fixed returns typically seen in traditional accounts.
Access to Cash Value: Policyholders can access the cash value through policy loans or withdrawals without the penalties associated with early withdrawals from 401(k) or IRAs (before age 59½).
Loan Repayment Flexibility: Loans against the cash value do not require a fixed repayment schedule, providing more financial flexibility compared to borrowing from a 401(k).
Life Insurance Coverage: IUL provides a death benefit that can protect your family financially, a feature not available in 401(k) or IRA accounts.
Living Benefits: IUL policies offer living benefits for chronic, critical, or terminal illness, allowing policyholders to access a portion of the death benefit early if needed for medical expenses and living expenses.
Estate Planning: IUL policies can be used in estate planning to provide liquidity for estate taxes and to facilitate wealth transfer to heirs more efficiently than traditional retirement accounts.
Yes, you can have more than one life insurance policy. Multiple policies can be beneficial after certain life events or as part of estate planning.
The 7-pay rule for Indexed Universal Life (IUL) insurance suggests paying the initial premium over seven years instead of one lump sum. This helps accumulate cash value more quickly and maximizes policy returns
For Term life insurance, a grace period allows time to make a payment before the policy lapses. For permanent life insurance, you have additional options, like using the policy’s cash value to cover premiums, though this reduces the cash value and death benefit. Contact customer service for specific options if you have payment issues. We always have solutions to assist you.
Yes, you can often exchange policies if the ownership remains the same. This might involve new underwriting. To avoid tax on cash value gains, consider a 1035 Exchange for a tax-free policy swap. Evaluate if the new policy is truly beneficial before making changes.
No, IUL life insurance does not reduce Social Security benefits.
Unlike 401(k) contributions capped at $20,500 ($27,000 for those over 50 in 2022), IUL policies have no fixed upper limit on annual premiums.
You’re never too young to plan for the future. An annuity can be a good long-term savings vehicle, such as for retirement. However, if you need access to the money before age 59½, the distribution might incur a 10% penalty. Consider whether you need short-term access to the funds before deciding on an annuity.
You can name any legally competent person or an entity, such as a trust or charity, as a beneficiary. Proceeds are paid directly to the beneficiary without probate delays. For complex needs, like caring for an aging parent or a special needs child, consider naming a trust as the beneficiary.
Efficient Wealth Transfer: IUL policies can facilitate tax-free wealth transfer to heirs, as the death benefit is generally tax-free. In contrast, 401(k) and traditional IRA inheritances can be subject to taxes, and Roth IRAs have specific distribution rules for beneficiaries.
Flexible Contributions: IUL policies allow for flexible premium payments, meaning you can adjust the amount and frequency of payments based on your financial situation. In contrast, 401(k), IRA, and Roth IRA contributions are typically fixed and subject to annual limits.
Tax-Free Retirement Income: Loans taken against the IUL's cash value can provide a tax-free source of retirement income. Withdrawals from traditional 401(k)s and IRAs are taxed as ordinary income, and Roth IRAs have specific withdrawal rules
Downside Protection: IUL policies often include a zero percent floor, ensuring that your cash value does not decrease during market downturns. Traditional retirement accounts, like 401(k)s and IRAs, are directly subject to market fluctuations, which can result in losses
Living Benefits for Long-Term Care: Many IUL policies offer riders that provide benefits for long-term care needs, allowing access to the death benefit early to cover expenses. Traditional retirement accounts do not offer such provisions
Though it's difficult to consider, buying life insurance for a child isn't just about financial protection if the unthinkable happens; it's also about securing their financial future. It locks in their insurability without requiring a medical exam, and most policies allow for increased coverage as the child reaches life milestones.
Yes, you can access your policy’s cash value through a withdrawal or a loan using the policy as collateral. Withdrawals reduce your policy values immediately, while loans may allow the values to grow, depending on the type of insurance. Loans don't have to be repaid during your lifetime, but any unpaid balance will reduce the death benefit for your beneficiary.
You can typically borrow up to 90% of your policy's accumulated cash value with an indexed universal life insurance policy. Ensure enough cash value remains to cover policy fees and keep the insurance in force.
It’s best not to name minor children as direct beneficiaries. Most states require appointing a guardian, which delays payment. Instead, name a guardian or establish a trust to manage the proceeds for the child’s benefit.
Yes, but if the owner differs from the insured, the owner should also be the beneficiary. Otherwise, the death benefit could be a taxable gift from the owner to the beneficiary.
A max-funded IUL can supplement retirement income through tax-free distributions and offers flexibility and tax efficiency, providing both a death benefit and substantial cash value.
Yes, IUL’s zero-floor guarantee makes it a secure option for retirement, protecting savings from market volatility and ensuring policy security even during financial crises.
Annuities and life insurance policy values are not reported on the FAFSA but non-qualified annuities are counted on the CSS Profile, used by many private colleges. High income may still limit need-based aid eligibility at state universities. Life insurance and annuities can accumulate cash values for college costs. Annuities can fund a Roth IRA, which allows penalty-free distributions for education. Loans or withdrawals from life insurance policies can also help pay for college, often tax-free.
Withdrawals from annuities are taxable as ordinary income and can affect the taxation of your Social Security benefits. Withdrawals from life insurance policies, typically through loans or withdrawals, are generally tax-free and should not affect your Social Security benefits. Consult your tax advisor for specific advice.
Life insurance can enable larger charitable gifts than direct contributions. Instead of donating directly, use the funds to pay premiums on a policy with the charity as the beneficiary. The charity receives a larger death benefit, potentially offering income, estate, and gift tax benefits.
IULs offer flexibility, tax perks, and no contribution limits, while 401(k) plans have contribution limits and early withdrawal penalties. IULs provide more control over investments compared to the restrictions of 401(k) plans.