Building Generational Wealth With Indexed Universal Life Insurance
The first way to build generational wealth is kind of a bummer, and is a benefit offered by all types of life insurance, so we won’t spend a ton of time on it. This method is to pass away as IULs have a death-benefit component. With Amplify you can leave up to $5 million to your beneficiaries.
The more unique and endlessly more enjoyable way to create generational wealth with an IUL is to build cash-value while you’re alive. For IULs, a portion of your payment covers the cost of insurance and the rest is used to build cash-value. This cash in your policy is expected to grow over time as you continue to make payments and gives you the ability to generate compounding returns.
This is the part of IULs that is really special so we’ll take a moment here. Typically, cash in IUL policies generates returns based on the performance of an underlying index like the S&P 500. If the index experiences positive returns, your cash-value should increase up to a cap (typically about 9%). If the index experiences negative returns, your cash-value would be insulated from loss because most policies have a floor of 0% returns. This allows your policy to participate in up years and avoid down years. Do that for enough years and you could build a meaningful amount of cash in your policy.*
Here’s a calculator that lets you see how much cash you could build.
IUL Money Calculator
Your premiums grow between a cap of 9% and a floor of 0% yearly with an average rate of 6-8%. This means you never lose money and lock in gains every year. Did I mention it’s all tax-free?
*Tables and charts are for illustrative purposes only and are not based on any specific policy example. Please reference your specific policy for additional details. All guarantees and contractual obligations are based solely on the claims-paying ability of the issuing life insurance company. A death benefit will be associated with the policy based on an individual's age and health.
And now the fun part, you could choose to access these funds tax-free, while you’re alive.
If, for example, after 30 years you had $2 million in your policy, you could leave that money there and have it pass on to your beneficiaries with your death-benefit or you could use some of those funds via a policy loan while you’re alive.
And that’s the beauty of building generational wealth in an IUL. You have tremendous optionality. If you pass sooner than expected your family is covered by the death-benefit and the cash-value you’ve built to that point. And while you’re alive you can access these funds to pay for retirement, tuition, participate in infinite banking, whatever you’d like.
To learn more about building generational wealth with an IUL, we recommend talking to an Amplify agent. They’ll get an understanding of your financial situation and craft a specific policy for you.