Forget the Traditional Retirement!

Many of us have heard of multiple retirement plans, and retirement planning tools, that are well, conventional. These include such things as the traditional annuities, 401(k), the money market accounts, CDs, stocks, bonds, mutual funds, and many others. All of these have their places; however, they all have their drawbacks, as well.

There is one much overlooked retirement tool, that is actually a life insurance plan, that is amazing that many people overlook. This is the Indexed Universal Life Plan, or IUL. After this article, I hope all of you will better understand the Ins and Outs of the IUL, and how it can better fit into your portfolio.

First of all, the IUL gains cash value tax-free, much like a Roth IRA. This means you invest into it with post-tax dollars, and withdraw from it without being taxed. The difference from this and any other investment tool, you can withdraw from it at any time, there are no age limits.

The benefit to paying into the IUL with post-tax dollars is that, most likely, you will be at a higher tax bracket in your retirement, with fewer deductions, than when you are younger.

As mentioned before, you can withdraw at any age, as long as you leave your money in the plan to meet the plan’s minimums. Most of these are 5 years without occurring any penalties. You don’t have to wait until retirement age to withdraw what is YOUR money. You also can withdraw it for any reason, and don’t have to put the money back in.

The beauty of these plans are, they are not just a retirement plan, they also have a guaranteed death benefit in the event of your passing. This gives your family a sense of security.

The only downside of these plans are that you can’t pump too much into these plans at once, or they will lose their tax advantage. You have to think of these much like a water balloon. You have to slowly fill them, so they do not burst on you, and  you have more to throw at your friends.

And as March Madness ramps up, it makes me think of college planning once again. These can also be used as great tools college planning tools for young children. Much like we spoke of in The BEST Way to Pay for Your Kid’s College blog, this is an excellent Life Insurance plan to use for that purpose. You could have a Million Dollar Baby, only they don’t have to know about it, well not at least yet!


As always, feel free to contact us with any questions you may have and a free quote. We are here for you!

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