Indexed UL at 40? You Bet!

Life happens. Fast. One day you are making decisions on a career after high school and the next you are discussing a budget for the quickly approaching retirement years. Between a mortgage, a couple vehicles, and raising children, life insurance can easily be pushed to the side in order to spend money elsewhere. Before you know what happens, the big 40 comes around and it is time to look at things a little more closely. Several people even contemplate if there is even any point in life insurance at this age, especially indexed UL at 40.  People often assume that by this time, a really big investment would have to be made in order to receive any return.

Not the case.

Indexed UL at 40 years of age might be a great financial decision

So let’s think of indexed universal life insurance as a savings vehicle. 

We want to buy just a little bit of life insurance but pay the maximum premium allowed by the IRS guideline 7702. 

With an indexed UL policy, the premium is flexible. These permanent life insurance policies contain both investment and insurance components. The premiums are deposited in a cash account inside the policy and this account will increase by a crediting method which is set according to the terms of the policy.

indexed ul at 40This method is chosen by the policy owner and the interest is linked to one of the stock market indices such as the S&P 500, DOW JONES or NASDAQ.

You can earn interest up to a cap of currently around 12% – 14%.

You can’t lose money when the market has a negative return so your worst case return for a bad year is 0%.  Remember that this is life insurance so your cash value would be reduced by the amount of the policy charges.  Keep in mind that these charges are kept to a minimum because we are buying very little life insurance.

These policies have historically grown more than 7% per year.

Indexed UL at 40

If a 40-year-old male decided to invest $416.00 a month ($5,000 per year), by age 65 the cash value of his policy would equal $313,330. With that amount of cash accumulation, he could choose to receive a tax-free income of $29,984 per year. We are able to buy as little as $121,625 of life insurance.  This keeps the policy cost down and allows us to grow more cash in our policy.

Males: $5,000 per year for 24 years produces a tax-free income of $29,984 per year from age 65 – 100.

If a 40-year-old female were to invest the same $416 a month, she could receive $30,027 tax-free income at age 65. The cash value of her policy would be $308,466 at age 65 and her beginning death benefit would be only $169,006.  I know $416 per month sounds like a lot for $169,000 of life insurance benefit, but keep in mind that we are only using this policy as a cash accumulation tax-free retirement vehicle.

Females: $5000 per year for 24 years produces a tax-free income of $30,027 per year from age 65 – 100.

As mentioned above, Indexed UL policies will have charges. You can count on:

  • COI – cost of insurance charges, which we are keeping to a minimum
  • Policy Fee – usually around $80 to $100 per year
  • Unit Expense Charges – these vary by issue age, gender, underwriting class and typically go away after 10 years
  • Premium load – not all policies have premium loads but the ones that do will usually go away after 10 years.

All investments have charges of some kind.

Indexed universal life can be a great way to help save for retirement.  Every case is different so the best way to determine if an indexed ul policy is right for you is to get a personalized quote.  Your saving ability may be more or less than the 40-year-old examples above so it is best to have several illustrations run that will give you a range of options that are available to you.

We can do a screen share presentation that will help you understand how your policy can perform based on how much you would like to contribute, your age, and your future retirement outlook.

You can complete the form to the left of this page for a customized quote or give us a call at 1-800-712-8519.

Working with an Independent Insurance Agent

When you’re shopping for life insurance, it can be confusing trying to decide which type of plan is best for you. Luckily, we have experienced independent agents that would love to give you the best protection available. Unlike traditional agents, we don’t work with one single company. Instead, we represent dozens of highly rated companies across the nation and we can bring all of the best plans and premiums directly to you.

We know that shopping for life insurance is never a fun task. Nobody wants to think about his or her death, but not having life insurance is one of the worst mistakes that you could ever make for your loved ones. Regardless of which type of life insurance that you purchase, indexed UL, term life insurance, no exam, or any other, it’s vital that you get the protection that your family deserves.

The sooner you start saving in an indexed universal life policy, the more you can expect to receive in tax-free income.  If you start your indexed UL in your 20’s, you can expect to receive much more than if you buy indexed ul at 35 or indexed ul at 50.

If you have any questions about life insurance or about getting indexed UL, please contact one of our agents today. We would love to answer those questions and connect you with the best possible plan for you. If something tragic were to happen to you, and you didn’t have life insurance, your family would be left with a massive amount of debt and other final expenses. Losing someone that they love is never going to be easy, but being responsible for thousands of dollars of debt is going to make the whole situation that much worse.

If you’re looking to purchase an indexed UL plan, there are dozens of different factors that you’ll need to consider. Hopefully, this post answered any questions that you have about the plans and gives you the information that you need to purchase the perfect policy.

Please tell us what you think by leaving us a comment below.

About Ogletree Financial Services
About Ogletree Financial Services

As independent life insurance agents, we specialize in finding the best life insurance rates and policies for our clients.  Our customers are located all over the USA.  If you would like a personalized life insurance quote, you can start here on our website or give us a call at 1-800-712-8519.

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