An Indexed Universal Life (IUL) insurance policy is a type of permanent life insurance that combines a death benefit with a cash value component. The cash value grows based on the performance of a stock market index (like the S&P 500), but it’s not directly invested in the market.

Key features:

• Flexible premiums and adjustable death benefits

• Tax-free growth of the cash value

• Market-linked growth potential with a cap and a floor (you won't lose money due to market drops)

• Option to borrow against the cash value

It’s often used for wealth building, tax-free retirement income, and legacy planning.

Why Consider an IUL Over Other Plans?

Liquidity

Is a key benefit of an IUL because you can access the cash value of your policy at anytime, without taxes or penalties unlike your 401k, Roth IRA, CDs etc. This can be done through policy loans or withdrawals, giving you flexible access to funds for things like emergencies, education, business opportunities, or supplementing retirement income — all without penalties and often tax-free if structured properly.

Taxation

With an IUL, an amount loaned out of your life insurance policy is not treated as "paid out of the policy" and is therefore not included in taxable income, as long as your policy remains in-force.

Funding Amount

With an IUL, you have complete freedom to choose your death benefit and the associated premium amount to build the cash value you desire on a tax-advantaged basis.

Market Risk

With an IUL, your cash value can be credited with an interest rate based on increases in a market index, with protection from market index decreases.

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