Using an IUL as an Investment Vehicle

Using an IUL as an Investment Vehicle

This post is a response to all those naysayers who say that an Indexed Universal Life (IUL) policy cannot, or should not, be used as an investment tool. Let’s be clear here, the IUL is a life insurance policy, but thanks to IRS code 7702, all of the interest benefits and perks found within the IUL can now be used for associated investment funds within the IUL. The investment funds within the policy are limited to an algorithmic calculation that a reputable life insurance agent should know how to calculate. The purpose of this calculation is to be sure that the policy does not become a MEC (Modified Endowment Contract) which is taxable. Following are the benefits of over-funding an IUL and using it as an investment vehicle and at the same time (Infinite Banking) using the policy to fund your business…..becoming your own bank.:

  • Uninterrupted compounding
  • Full (uncapped) Participation in bull markets
    • The IUL I use has shown a 10.9% average annual growth over the past 10 years.
  • Avoidance of the bear markets
    • The IUL I use has a floor of +0.25% (Still greater than a savings account)
  • The ability to borrow money from the carrier at no more than 5% interest per year
    • IMPORTANT – the borrowed funds do not affect the cash value earning an average of 10.9%/year (Non-Direct Loan Recognition)
    • This enables you to act like a bank (Infinite Banking), using your money to earn interest, while using the same money to ostensibly, buy income-earning assets.
  • Deferred taxes
  • Tax-Free retirement
    • In actuality, you are borrowing your money at no more than 5% while it continues to earn at an average of 10.9 % with no plans on paying it back.
  • The cash value within the life insurance policy is protected from:
    • Taxes
    • Creditor Demands
    • Lawsuits
    • Judgements
    • Liens
  • Your cash value is protected from financial hardships caused by:
  • The Generational Wealth, that the pundits talk about is the life insurance portion that is passed on to your heirs. 

Yes, there are costs involved, the cost of the life insurance+.  It is this very life insurance that enables all of the benefits listed above.

Depending on when you begin the policy, at the age of retirement, your cash value can be as much as 30 times your cumulative premiums.  Let that sink in for a while. 

Each client has different needs, requirements, budgetary restrictions, pressures, and plans, all of which MUST be taken into account when designing the policy.  You NEVER want to allow the policy to lapse.  If it lapses, you still can get your cash value, but it can become taxable.

If used correctly and designed with proficient understanding, the IUL can be your BEST and most predictable investment.

As always, contact me if you would like me to design a plan for you……You will be amazed.



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