In the newly published guide, the IUL expert notes that while indexed universal life insurance (IUL) policies are more commonly used by individuals and families to offset the impact of increasing tax rates and market fluctuations on their retirement savings, this type of insurance can also be suited to the needs of business owners to adequately address unexpected financial hurdles.
Indexed Universal Life says in its latest guide that one of the main advantages of an IUL policy for business owners is its cash value growth potential. The policy provides businesses with an extra layer of stability since its cash value component grows on a tax-deferred basis, meaning they can accumulate a significant amount of funds until they decide to withdraw them.
The expert also highlights the risk-free nature of an IUL policy: “Due to IUL policy cash values having a “floor,” there is no downside risk to your principal in these plans – even if the underlying index that is being tracked suffers a substantial loss or experiences a high rate of volatility.” As such, IUL policyholders can rest assured that their principal is generally protected as the interest rate linked to the account will never be less than the floor.
Business owners who choose this type of permanent life insurance can also borrow funds against the cash value accumulated in the policy to fund equipment purchases at more favorable rates, which would allow them to meet their changing business needs while optimizing efficiency and productivity.
An IUL policy can also serve as an instrument for financing the sale of a business in the event of the owner’s death when a succession plan that ensures its continuation has not been prepared. “With a buy-sell agreement, remaining partners or key individuals can use the funds from the IUL policy to purchase the insured’s portion of the company – essentially keeping the business running in the interim,” the expert explains.
Small business owners who are interested in buying an IUL policy are recommended to communicate their needs with a licensed professional with expertise in this type of insurance. Interested parties can use Indexed Universal Life’s website search tool to find IUL experts that are available for consultation in their local area.
They can also take advantage of Indexed Universal Life’s calculator for a quick estimation of their monthly premiums and cash value accumulation.
Indexed Universal Life
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Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Times World USA journalist was involved in the writing and production of this article.