Building wealth is a common financial goal, and building generational wealth is an even loftier objective. While there are many ways to build wealth, one method that is often overlooked is the use of Indexed Universal Life insurance (IUL). IUL is a type of life insurance policy that offers a unique way to build wealth while providing a death benefit to your beneficiaries.
The first method to build generational wealth with an IUL is by passing away.
This may sound grim, but it is important to understand that IUL policies offer a death benefit component. With Amplify, you can leave up to $5 million to your beneficiaries, providing them with financial protection and security.
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.*
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.