How Does IUL (Indexed Universal Life Insurance) Work?

how does iul work indexed universal life insurance in this video we're going to take a high-level look at the IUL we're going to look and see what it is how it works and what sets it apart from the other options in the marketplace so this will be like a thirty thousand foot looked down on the IUL Indian in subsequent videos will go into a lot more in depth detail about the IUL and how dose an iul work so first of all and I you l Xin abbreviation for indexed universal life it's a permanent life insurance policy it specifically designed to function as an asset and that's really our focus it barefoot retirement most people.

We're finding these days the retirement is their biggest key concern about being able to have enough money to last you throughout your retirement people are living longer people been hurt in the marketplace and lost tons of money and that's their number one concern is having enough assets to last them throughout their lifetime.

so that's what our plan is really all about is using insurance life insurance as an asset in by properly structuring these policies and that's the key that you're here throughout these videos we can enhance the living benefits in this changes the focus from a death benefit to living benefit most people when you think about life insurance what you and I have heard most of our lives as you think life insurance in its to protect your life and what your heirs who received when you die but the whole focus of the Barefoot retirement in our core flagship product is living benefits creating assets it will take here you throughout your entire life and it's really exciting really good stuff instead of using life insurance adjusters risk management tool you know if you died in you know how enough funds to take care of your family as a risk management what we're doing is using this as an asset so there's other types of permanent insurance out there they can be used as an asset among these are whole life variable life and universal life products in as we've mentioned in previous videos we have a variety of experts on our team and if you'd like to further investigate and find out more information on any of these other forms of permanent life products that you can use it as an asset let us know.

Because we can offer any in all of these products we have the ability to offer and write these products for any of our clients but our goal is to find the product in the plane there will benefit our clients the very most and we've done a research in great depth and we found that 99% of the time our flagship product isn't much better fit in and produces a much better results than any other product on the market for our clients so what is it a UL house one great feature about them is they have very flexible premiums in that unlike just about any other policies out there so you can skip four years you can pay as little as 10 percent of the premium you can catch up they're underpaid premiums from the previous year or years without penalty it's one of the most flexible permanent insurance products on the market so they're just using example real quick and say that you plan to contribute $100,000 a year to year I you ellen.

And that could be ten thousand it could be whenever you choose to buy in this example let's say you contribute a hundred thousand year one year to is a is an off-market oslo your business's doesn't do as well as you think so you only contribute ten thousand well the following year business comes back and your flash if you want to you can go ahead and contribute a hundred in nineteen thousand that next year to make up for that so talk about flexibility it's amazingly flexible and it also has the insurance component to it and it has the investment component so like other permanent life insurance products IUL premiums are directly deposited into the policy's cash account will talk a lot about growing your cash account policy charges are deducted from your cash account and you'll find in the policy charges for the IUL the lowest in the entire industry but your index gains are added to the policy's cash account so we'll take a look at it here these policies are structured with the highest premium for the smallest death benefit allowed by the IRS in its just the opposite of what you've probably heard most of your life and what you see the ads on TV and radio it's that we can get you the biggest death benefit for the lowest amount of premium our approach is exactly the opposite so this allows for the smallest expense for the death benefit in the largest benefit for your cash account why you're living and that's what to really a living benefit living asset to the goal is to build your cash value in your policy so number step one is you make your premium deposit and that's the amount that you put into your your contribution amount you put into your IUL each year from that the insurance company deducts the policy charges which like I said are some of the lowest in the entire industry in many depend on how we structure your policy your age in lots of variables that many times the policy charges can stop after a fixed number of years in game go completely 20 min then what's added to your cash or cash value each year is either the dividends paid by the company depending on the type of product that we were that you choose or the crediting grade from the indexes which will talk about in just a moment so that all of those factors contribute to what you're into the year cash value amount is so let's take a look at what differentiates the IUL from other types of permanent life insurance that you use for cash accumulation the growth of the IUL policy's cash value is based on the performance of an equity index usually the S&P or other similar indexers and it does not include David in earnings the index earnings are colored by Captain a floor so they have a floor level in a camp level which I'll show you just a moment most other policy returns are based on a flat crediting rate that's established by the insurance carrier it is it is often adjusted from time to time so for example today as of today.

The current assumption universal life what they call that you have the policy returns are based on a flat dividend rate that's established by the insurance carrier in date they have the right to bility to justice from time to time and typically these range from eight to 25 percent return per year with whole life the positive returns are based on the actual investment returns of specific equity investments in typically range from 4 to 7 percent the variable universal life policy of returns are based on actual market returns and they can be subject to market losses which were not amount market losses with our program so this is how the index is credited to your cash account like I say we have this 0% floor in the 17% can't so if the market in any given year and this is the big see if that UL program if the market save when you're the market as it ten twenty thirty percent drop damn you are protected with 80 percent floor so you just don't get any additions added to your cash value accounting year but most importantly 0 losses and then when the market is up you get that amounts of the market went up let's say twenty percent a year then you would only be credited for seventeen percent of that 20 percent gain but we'll show you and further biddy videos how this proves how over the long run here's a quick example so the red line is in 1997 is an individual invested $100,000 into just straight into the S&P 500 index in many investment gurus in advisers say that's one of the smartest things that you can do dat of playing individual equities or mutual funds to just put your money into the S&P 500 index outperforms the huge majority a professionally managed mutual funds so you can see when they did that in over the period of time they grew $246,000 however the Green Line is where they put the same hundred thousand dollars but they put it into an IU hour and because there's zero losses in the idea well there's no down years you can see the difference the funds in the IUL grew to three hundred and sixteen thousand dollars which is amazing so see the difference in the dollar difference in returns and you can see the percentage difference in return to we're comparing to have a very you know the S&P 500 like we said just a very respected indexes lots of people live and invest heavily in compared to the IUL so our strategy with you well as one of the most powerful of all comparable life insurance product options the you the UL as lower returns and it's based off of the company assumptions are they pretty much control that if they control it typically going to give you last the whole life dividend is more sluggish in has higher expenses in a response slower too good market conditions the vol is as potentially lose big as we just said when the market has it down term the great thing is that.

I ul is guaranteed not to lose money due to market downturns and over the last 24 years UL the blended index which most of our clients choose to to a lack has returned an average of 9.2 4 percent annually over 24 years so there are UL contains the perfect mix of control protection in return potential for a foundational foundational aspect control that means the return to based on the market performance and not reset by the company protection 20 percent more you know floor level means that you won't lose money guaranteed market downturns in the high potential for return as we just said 9.2 percent average over per year averaged over 24 years so just a quick bullet points the components of our specialized type of eid-ul by the way just so you know there are many different types in in versions of indexed universal life products out there ours is the special unique patent-pending program development really ingenious person and we believe it is the strongest most powerful IUL on the market bar none so as we said before very flexible premiums we do have a death benefit if you compare that to the S&P 500 if you put your money in that there is ZERO death benefit alright get the cash value account you have the ability to earn returns from 0% floor to the 17% can have the option to borrow your cash value account and any favorable rate and use it to do anything you want and you can do it you need high so your cash value count you grow that account you can pull money or money and embedded in each time you wanna put it into anything you want and you if you choose to repay it you can but you don't have to prepare you fund it with after-tax dollars that is different compared to an IRA or 401k you put in pre-tax dollars without with that UL you you pay the taxes on the fund's first and then you put it in there but the funds grow tax deferred you can access them when you take your money out you get a tax free retirement for the rest of your life seen pull those funds out tax-free which is amazing and we have some more of my videos on that later on in this series that will go into much more detail that I think would really knock your socks off and there's no distribution penalties when you pull the puns outdoor bar the punch the it's completely private there's no IRS reporting required whatsoever we can set up if we properly funded improperly structure your retirement it can generate a lifetime tax-free income for you there's no investment restrictions on the budget you borrow out you know and so many other with the other funds in the other programs out there they're highly restrictive for what you can put them into this has zero restriction credit approved in most states even credit approved from the IRS no contribution limits yet to be approved for various limits but compared to a Roth 401k IRA there's no contribution limits is literally people that put millions of dollars here in 20 you else had the lowest fees in the industry the bones can pass to europe heirs tax-free which is amazing it gives you the maximum flexibility and safety so that's it for our high-level look at the IUL and we'll see in the next video to dive deeper into what the IUL is really about thanks so much