Who Is Indexed Universal Life Insurance For? | IUL Explained With Real Examples

So who in the world is index universal life or whole life or variable life? Specifically, who is cash value life insurance actually a fit for? That's what we're going to be talking about in this video today. So I see a ton of TikTok videos, Instagram videos, people on Facebook and social media, and they make it sound like index universal life or cash value life insurance in general is just for everybody. It's a panacea. It's going to solve all your problems and it's to do it with no risk tax free. And some of that's true and some of that's not true. I had a discovery call, which if you would like to have a discovery call with our team, leveragewm.com, or you can check the description below. You can see discovery call there. Book a call with our team. Ask us any questions that you might have. Had a discovery call a couple of weeks ago, talking with a fine gentleman. And he's like, Hey, I want to put in $100,000. And then I want to quickly go in, loan it all out, buy some property, this, that, and the other. Got to talking to him and just realized that his time horizon was just not going to work for really any type of cash value life insurance policy. And what I told him was like, Hey, thanks for calling us. I'm glad that you did. We're saving you from a huge headache. Do not buy a life insurance policy. And he kind of like sat back and he's like, man, I appreciate you saying that. And when the time is right, I'm going to call you guys back and we're going to do this thing. But I agree with you. My time horizon is not right. So who is this a fit for? In my mind, it's pretty simple. Okay. Index universal life insurance is going to be for someone who's already, let's say maxing out their 401k or already heavily investing in the market. And they're looking for something that's a different risk category. They're looking for something that's going to give them tax benefits in the future. Not today, tax benefits in the future. And they have a long-term time horizon. Oftentimes these people are going to be high income earners or have built up significant assets already. The easiest way to see this would be look at your portfolio. Look at your 401k, your IRA, your SEP simple 403b, your brokerage account. If you have any dollars allocated to bonds, which most people do, even the riskiest portfolios will have some kind of an allocation into bonds more than likely. And if you have any allocation into bonds, I would submit to you that it might be worth considering cash value life insurance as a bond alternative. Let me show you why. So we've got here $100,000 a year premium policy. So again, we're talking high income earners that are already doing other things. And we know that because someone who's not a high income earner, they're not going to be able to pay $100,000 a year. Do you have to pay a hundred? No, but you should be a high income earner. You should already be doing your risky investing somewhere else. This becomes a way to mitigate some of that risk and give you some future tax benefits. $100,000 a year goes in. The death benefit on this policy is $1.5 million. When we look at the actual numbers in year 10, we've paid in a million. We've got $1.2 million in cash. We've paid in a million. We've got $1.2 million in cash. Our internal rate of return is 3.71% tax free. Is that anything to write home about? Not really. Except for the fact that at this point by year 10, your death benefit has essentially made you money. This isn't an expense at this point. We've got to change the way we're thinking. This isn't an expense anymore. I'm making money on this. I have positive internal rate of return on a product that's going to give my beneficiaries, my family, 2.7 million, but tax free. Let's change the way we're thinking about this. If this is a bond alternative, and if I'm holding this for any serious amount of time, can I beat a bond portfolio? The answer is absolutely. We go out our internal rate of return on this policy right here. 6.36% tax free without any downside market risk. 6.3% tax free without any downside market risk. I would tell you that that's going to be tough to beat in a bond portfolio, layering on the fact that all this time, I've had a really healthy death benefit. Who is Index Universal Life or Cash Value Life Insurance a fit for? This is a fit for people who are looking for a different flavor of risk in their investment portfolio. They're already doing heavily risk investing somewhere else, whether it's their 401k, IRAs, brokerage accounts. They're already invested heavily risky somewhere else. They're looking for a risk off asset. They're a high income earner who's looking for future tax benefits, not tax benefits today. Of course, they like the idea of having a tax free death benefit left to their family. For those people with a medium to long-term time horizon, this becomes a very viable option. A lot of our clients love it because they look at it through the right lens. But if you're trying to make this do something that it can't do, it's going to be the worst thing you ever purchased. If all of a sudden, you're looking for this to be some kind of short term panacea, I just don't see how it works. You put in 100,000, your cash value is 26. This is the worst short-term vehicle in the world. Yet, there are people out there on YouTube, on X, Instagram, TikTok. They're telling you that this is a great short-term vehicle. Put in all your money and loan it right back out. Win, win, win, win, win. Everybody wins. No. This is a terrible short-term vehicle. It's a great medium to long-term vehicle for high income earners looking for a risk off asset and future tax benefit. Hopefully, this has been helpful. If you are considering one of these policies, you need to talk to somebody who knows what they're doing. I am confident that we can help you in this area. We help thousands of people in this area, many thousands that don't ever even end up working with us. They go through our discovery call process. We tell them, hey, this isn't a fit. If you're looking for a safe place to explore this as an option for you and your family, leveragewm.com. Check the description below. You can see the links. Book a 30-minute discovery call with us. We'll answer all your questions. We'll get you on the right path. I'm confident that we can help. Until then, take care.