Fixed Index Universal Life (FUIL) – Tax FREE Retirement
FIUL can be an attractive option for households that seek both a death benefit and the ability to augment retirement income.
What FUIL offers
- A death benefit that is income tax FREE
- The ability to use fixed-index crediting methods to accumulate cash value that can be converted to a tax-FREE retirement income stream
- Interest gains that can be enhanced by higher potential market results tied to indexed returns
- Protection from down markets, as all prior interest gains are locked in
- Income tax-deferred growth on interest gains
Among the three main universal LIFE programs – Fixed, Variable and Fixed Indexed –FIUL arguably delivers the most compelling mix of attributes for the majority of people from children to retirees.
Two Major FIUL Markets
There are two broad markets for agents like you who appreciate the potential of FIUL as a retirement income tool. The first of these is the personal market, and there are several salient selling points here to consider.
- Increased cash value control
- Enhanced policy accumulation potential
- Tax favored retirement income
- Flexibility for people to change their policy according to evolving needs and changing market conditions
FIUL also appeals in large part to the business market, because it provides strong cash values that are accessible for retirement planning, as well as reserves or emergency funds for business purposes. FUIL is also suitable for Key Person Insurance, Deferred Compensation, and Executive Bonus Programs.
Personal Market vs. Business Market
In the personal market, uncovering the client’s financial goal – which is often centered around supplemental income and death benefit – is simple. In the business market, however, agents like you may need to identify a specific application for FIUL that can improve the business owner’s operations or provide resolution for another business need. In many cases, an application may not be apparent to the owner without an exploratory discussion. YOUR Insurance Group will guide you through the process of asking probing questions like the ones below to uncover the right solution for your client:
- Can you envision a situation where the income generated by FIUL can help you pay off a business operating loan or other business debt?
- Would it be useful if FIUL could help you fund a cross-purchase or stock redemption buy/sell agreement?
- Are there key managers or employees whose death could result in a substantial economic loss for the business? Could FIUL provide you with a cost-effective and novel means to provide executive bonuses, wherein you pay the premium on life insurance policies for selective individuals but deduct the premium as ordinary business expense?
- Would FIUL enable your business to offer selected employees non-qualified deferred compensation where you own the policy and pay the premiums but can use the income it generates to pay an employees’ retirement benefits?
- Have you considered using FIUL as a component of a defined benefit plan to help supplement future retirement income streams?
Knowing what questions to ask and how to interpret the answers you receive is key, and YOUR Insurance Group will give you the tools to master this tried and true exploratory communication practice.