8 reasons to use life insurance to escape taxes and market loss.

8 Reasons to use Indexed Universal Life to build a completely Tax-Free nest egg you can use to pass wealth, create a stream of tax-free income or borrow against to earn interest in two places at the same time. All while having incredible peace of mind that your money is protected against market loss.

  1. Tax-free growth. Unlike a 40lk or IRA that may save you a little tax now for a bigger tax bill later, you aren’t getting tax-free growth. You are setting yourself up for delayed tax payments. With an Indexed Universal Life plan you are getting truly tax-free growth on your principal and on your future earnings. Seeing how your money can compound in a tax-free environment can build a significant nest egg down the road for you and your family. It doesn’t matter what you earn if the IRS can tax you higher. You must first solve your tax problem.
  2. Tax-free income. Through the use of policy loans you are able to access your money tax-free. Under the policy loan provision you don’t have to pay tax when you access your money. Plus you can use your money on whatever you deem beneficial to your family. Car purchases, college savings, future investments.
  3. Tax-free death benefit. Under IRS tax code 7702 your death benefit, as long as it is structured correctly, will pay out to your family or beneficiary tax-free. No federal tax, no state tax or local income tax. Truly tax free passing of wealth to keep your family protected and shielded from Uncle Sam. There nothing worse than savings and investing your whole life only to leave a giant tax bill for your loved ones.
  4. No negative returns. Insurance companies can offer something Wall Street, equity markets, Real Estate and bond funds can’t, guarantees. With Indexed Universal Life you get a guarantee that you will not suffer negative returns that decrease or in some cases chop your account values down. There is never a decline in account values due to the markets or indexes used to help grow your funds. No losing or seeing your account values slide backwards. Just peace of mind.
  5. Carrier takes on the risk. What if the Stock Market drops by 38% like it did in 2008 or like it did from 2000–2002 after the dot com bubble and 9/11? Your money is protected. The insurance company bears the risk and absorbs the losses. This is what insurance is for. Let the insurance company deal with the markets and growing your money, while you enjoying the positive crediting on your account during good years.
  6. Cash in on higher positive returns. Who wouldn’t want to enjoy the upside of the market and avoid the down side at the same time? During years when the markets have positive returns your account participates in the positive growth. Some companies have very high caps and others have guaranteed return rates.
  7. Ability to access your money. One of the biggest complaints heard about 401k’s comes when you need access to your money for emergencies, college tuition or a good investment opportunity. Being blocked from your own money by large penalties and taxes significantly limits access to your money. It is your money right? With Indexed Universal Life you are able to access your money as soon as you have available cash value. As mentioned you can access this money tax-free, but it also continues to earn interest inside the plan as if you never touched the money. Double dipping!
  8. Roth’s just don’t cut it. I am a big fan of the Roth IRA. You pay the tax now and never pay it again. Makes sense to get the tax out of the way now. Roth’s, however, come with contribution and income limitations. Many of the clients I work with either want to save more than $5000 a year or they make too much income to contribute at all. With life insurance there isn’t an income ceiling and you can contribute as much as you can afford to set aside. This is an ideal way for higher income earners to get the advantages of a Roth without the IRS red tape. But this isn’t only reserved for the wealthy.

The wealthy have strategically used life insurance as a way to safely grow their money tax-free for over 100 years. They have used the money in their plans to start or save businesses. To do investing out of their plan to earn interest in two places at once. With indexed insurance plans you get to benefit from the upward movement of the stock market and relax during the downward movement. Give yourself total peace of mind planning all while using a tool as versatile as a Swiss army knife.


Stephen Gardner

To learn more about how to build a tax-free retirement plan you can access before 59 ½ and strategically use to your advantage, reach out to my office and schedule a free consultation. Are you a business owner that makes over $150,000 a year, then we really need to speak about how to get all of these advantages plus some incredible tax-write off’s on the money you contribute.



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