Just think about how great it would be if you could take advantage of the tax saving advantages that the ultra-rich use. Yes, there are tax saving strategies that can provide you with a tax-free income for your entire life. Are they legal? Sure they are! In fact, many wealthy people in the U.S. Congress utilize this very same strategy, and you can too! And what’s really great is that you don’t have to invest a large sum of money to get started, just your first months premium. Additionally, this tax-free savings program also provides you with a guaranteed life insurance benefit that is in place throughout your entire life, unlike term life insurance policies.
In many cases, this program is very competitively priced in comparison to term life policies. Also, in the majority of cases, no medical exam is required to obtain this coverage!
What we are talking about is Equity Indexed Universal Life Insurance or “EIUL” which is permanent insurance that accumulates a cash value until your passing or age 119 (whichever comes first). These programs have been available through major life insurance companies since the mid-1980’s and are increasing in popularity as time goes on, and for very good reason. Now that I’ve gotten you curious about this incredible investment and permanent coverage, let’s talk about some other very important benefits of an EIUL:
Throughout the life of your policy, once the accumulation of cash value kicks in, you can borrow money from your policy and NEVER need to repay it. The money that you borrow is at a virtually zero percent interest rate. And, just like a car loan or a home mortgage loan, you are not taxed on money you take out as a loan.
If you were one of those people who went through financial agony, watching your investments fall off a cliff starting in the year 2001 through 2008, you are most certainly going to be interested in EIUL’s. EIUL’s will provide you with all upside gains and no downside risk. If a $100,000 investment was made in the S & P 500, you would have lost over $10,000 by the close of 2010. If you had the same $100,000 accumulated investment in a EIUL, your balance at the close of 2010 would have been $196,989, a gain of 97%.
Your hard earned money is too important to gamble with it! Because this is an equity indexed investment, it’s tied to the rate of growth of the S & P 500 (or other selected options that you can choose from). However, unlike the S & P 500, you will not have the downside risk (losses) so common in the stock market, IRA’s and 401(k)’s. Over the past 25 years, it’s common for EIUL’s to have an average gain of 7.1% annually with interest compounding year after year, even in a down market. Isn’t that incredible? You’ll have all upside with NO downside risk.
Imagine being able to bank on yourself! Need to purchase a car? Take out a loan from your policy! Want to start your own business or pay for inventory and equipment? Bank on yourself instead! In fact, many years ago, such business legends as Walt Disney, J.C. Penney, and Ray Kroc (founder of McDonald’s) have used their cash value life insurance policies to start their businesses when the banks turned down their loan request. Could you be the next savvy business person using this program and becoming a business multi-millionaire legend?
If you’re a business owner, don’t forget that an EIUL would be a smart business move by covering your key employees! Parents and grandparents can also utilize this program for their children and grandchildren. Just think about it… with just small monthly premiums, the child would have access to these same great benefits. Benefits that would allow the child to borrow money for a college education, tax-free and virtually interest free! They could also take out loans to assist with their first time home purchase or pay for a car. And guess what? They could be a millionaire by their 55th birthday and retire using a tax-free loan that provides them with an annual income for the rest of their life!This program is also ideal for those starting a family or starting off in their first career. Not only does this provide them with a great, guaranteed death benefit that increases over time, policy riders can also be added to provide for accidental death, disability coverage, and so much more.
Think about the peace of mind that you’ll have being in a position to borrow money on your policy if you ever became unemployed and needed to cover your expenses! For those who are high-income earners, this policy is ideal. You will no longer be hampered by the maximum contribution limits for those tax-deferred type retirement investments. Depending on how your EIUL is structured, you can contribute a sizeable amount to your investment every month (or every year) to obtain the maximum benefit. You can also jump start the advantages of this program by starting off with a lump-sum investment and making contributions to it over the years.
Rather than purchasing expensive (and often unnecessary) long-term care insurance, consider using the accumulated cash value from your EIUL instead to help cover your cost of care. That way, in the event you do need long term care, you can fund it yourself. If you never need this care, you didn’t waste your money on a long-term care policy that you never used. And don’t forget, you could take out a tax-free, virtually no interest loans against your EIUL to pay off your home mortgage early, and you never have to repay that loan to your EIUL! Think of all the compound interest that you’ll save and the peace of mind knowing that YOU own your home (rather than the mortgage company).
Because of the way that you initially structure your EIUL, your monthly contribution will never increase during your lifetime. You can also structure the policy so that you can stop contributing to it at a certain age. You can also structure it so that you can start receiving annual loans as your income, based upon your projected retirement age. Many people are even structuring their EIUL so that as they get older and their incomes rise, they increase their contributions to the EIUL which provides them with a larger nest egg once they reach retirement age.
Because an EIUL is categorized by the government as a life insurance program, your beneficiary(s) will receive the death benefit income tax free! This is, of course, less any loans that had been taken out on the policy.
Now, let’s compare the Equity Indexed Universal Life program to other types of savings programs, such as 401(k)’s and IRA’s. Unlike IRA’s and 401(k)’s, you are able to invest a larger percentage of your annual income to this program. Also, unlike a tax deferred IRA and 401(k), a EIUL provides you with tax free income through its loan feature. An IRA and 401(k) are merely tax deferred.
With an EIUL, the government has no control over your account, therefore, they can not tell you when you must start taking withdrawals or stop investing in this program (such as with IRA’s and 401(k)’s). Wouldn’t it be great to be in control of your own money and your future! And did you know, if you withdrew money from your IRA or 401(k) prior to age 59-1/2, you would pay the government a 10% penalty for taking money out of your own account? Furthermore, the money that you withdrew would be taxed as regular income tax, rather than at the lower capital gains tax rate. Depending on the amount you withdraw, just the tax could be well over 40% PLUS the penalty of 10%. OUCH!
For most people, this negates all benefits of a 401(k) including the advantage of any employer matching contributions! With 401(k)’s and IRA’s, the government mandates when you must start withdrawing money out of these accounts (whether you need the money or not) and they will charge you high penalties if you fail to make those required withdrawals. As it sits today, mandated withdrawals begin at age 70. Since traditional 401(k)’s and IRA’s are merely tax-deferred accounts, you are then subject to pay the prevailing tax rate at the time of the withdrawal. History tells us that we could be looking at higher and higher taxation with every passing year. Because of the all upside / no downside risk of an EIUL, you are in better control of your money when compared to a traditional or Roth IRA or 401(k).
We’ve all heard of the tragic stories where someone had retired and the stock market had a serious downturn which greatly reduced the funds in their 401(k) or IRA. With the EIUL, you can plan for life events, such as retirement, and not worry about these types of market risks. This will help you to plan very far in to the future so that you do not outlive your money. With a traditional or Roth 401(k) or IRA, if the markets (that your plans are invested in) take a serious plunge (as they did in 2008) how are you going to protect your money? If you pulled your money out of the plans, you’ll get hit with a 10% penalty PLUS the prevailing state and federal income tax at that time. This could essentially wipe out 50% or more from your tax-deferred investment.
When you pass away, the beneficiary(s) of your traditional 401(k) or IRA would receive the inheritance funds AFTER the federal and state taxes are deducted. Depending on the tax rate and tax policies at the time of your passing, this could wipe out a significant portion of your traditional IRA or 401(k) account balances. Are you starting to realize that your wisest financial plan would be to roll over your 401(k) or IRA into an EIUL? Remember, with the long term viability of Social Security in question, it certainly would be wise to bank on yourself to insure that your retirement is protected and well funded!
Based on your age and your ability to contribute to this EIUL, we are able to tailor one that will suit your needs. As brokers for many of the top rated insurance carriers, we will shop for the best program that will meet your specific needs. We’re just a phone call away, so let’s get started today ! Having an Equity Indexed Universal Life Insurance Policy is simply the smartest decision you can make with your money and to protect your financial future ! Just contact us or give us a call at 480-288-4310 for more information about this fantastic program.