You insure your automobiles, your home, and your prized motorcycle. What about insuring your love? With life insurance you can rest assured that your family will be taken care of in the event of your passing away. There are a variety of life insurance plans out there ranging from cost-effective term insurance (10, 20, or 30 year) to universal and whole life policies that accumulate cash savings. What if there was a policy with the life insurance protection you may need and the opportunity for low-risk cash value growth you want? Farmers New World Life now offers a policy that can give you the best of both worlds in the form of Indexed Universal Life Insurance.
What is Indexed Universal Life (IUL)?
Indexed Universal Life insurance (IUL) is a relatively new concept, having only been around since 1998. IUL’s are similar to regular Universal Life in the sense that both policies offer flexibility of premiums, offer level or increasing death benefits, and accumulate cash savings. What makes Indexed Universal Life different is the fact that the cash growth is tied to an index [An Index is defined as a measurement of the performance of a selected group of stocks]. With the Farmers Index Universal Life policy, there is a market floor of 0% which means the index account you choose to invest in will not lose money. The Farmers IUL product also offers a market ceiling of 12% which is the most your index account can gain.
What can Indexed Universal Life Be Used For?
Indexed Universal Life policies also offer tax benefits as well. The money you are paying in to your policy is considered to be after tax dollars. If you need to supplement your retirement income, you can take cash withdrawals from the cash savings that has built up. Unlike traditional retirement plans such as a Simple IRA or 401(k), you won’t have to pay income tax on the money you pull out from your savings account.
For those who have large estates, the proceeds from an Indexed Universal Life policy can be used to help pay estate taxes. According to a recent publication from the IRS, an estate tax return must be filed if your gross estate, plus any taxable gifts and specific gift tax exemption, is more than the basic exclusion amount ($5,450,000 for 2016). If properly funded, Indexed Universal Life or any permanent life policy can be used to pay any estate taxes. In order to ensure your policy is performing optimally, it is recommended that you review your life policy annually.
How Much Coverage Is Right For Me?
The best way to figure out how much coverage you need is to sit down and perform a needs analysis. Our agents will also sit down with you and address any concerns you might have be it leaving money for your children to attend college, pay off your mortgage, or provide income replacement for your family.