IUL for Emergency Physicians

Emergency medicine is a huge category that can encompass many medical specialties.

Emergency physicians remain in big demand and as such, they represent some of the top earners as medical professionals.

Chron.com, a national database that tracks salaries of most groups of professionals reports that the average starting salary for an emergency physician is about $349,000.

Like many other high-income medical professionals, emergency physicians are often limited by traditional retirement programs because of IRS rules that apply to annual contributions, tax liability, early withdrawal penalties, and required minimum distributions. That’s why we created this article, to teach about IUL for emergency physicians.

If these challenges are affecting your wealth accumulation goals and expectations, it may be a very good time to add a LIRP (life insurance retirement plan) to your retirement portfolio.

In fact, if your have accumulated a lot of money in your 401k or IRA and are over age 59 1/2,  it may even be time to consider converting your IRA to a LIRP product like Indexed Universal Life Insurance (IUL).

What is Indexed Universal Life Insurance?

A properly designed IUL has the ability to accumulate considerably more cash value than other permanent life insurance products because a portion of the policyholder’s premium earns interest via a rate that is determined by specific securities indices such as the S$P 500, NASD or DOW.

The good news for investors is that if an index loses money during a crediting period, the cash value account will not be negatively impacted because of a “floor” rate that is contained in the policy contract.

Indexed Universal Life (IUL) is a permanent life insurance product that offers a guaranteed death benefit and includes a cash value component.

If you spend some time researching the IUL on the internet, you’ll likely find a plethora of negative articles that are primarily written by individuals who are in the business of selling other traditional investment products that rarely deliver the results of a properly designed IUL.

For medical professionals like ER docs who are looking for a better strategy to accumulate the wealth they’ll need to live the lifestyle they expect during retirement, this article will provide you a better grasp of a LIRP using the IUL.

What are the Advantages of an IUL Policy?

When we discuss the advantages of using an IUL for retirement planning, it makes sense to discuss the disadvantages of traditional retirement products at the same time.

• Although your premiums paid into your IUL are not tax-deductible like a 401(k) or IRA, your income stream in retirement is not taxable like a 401(k) or IRA.
• The annual contributions you are allowed when investing in a 401(k) or IRA are limited to about $19,000 a year which can seriously impact your wealth accumulation when you reach the mandatory distribution age of 70 ½. With the IUL there is no limit established by the IRS on premiums paid into your LIRP.
• If you need to withdraw money from your IRA or 401(k) before age 59 ½ you’ll you will be required to pay income tax on the withdrawal and in most cases, a rather stiff penalty of 10%. If you are using an IUL to accumulate wealth, you can withdraw available cash value at any time without penalties or any tax liability. With an IUL, you withdraw cash via a policy loan and you don’t even have to pay it back. You’re only limited by the amount of cash value in your policy.
• Unlike investments in the stock market, any gains from your IUL investments (index accounts) are locked in using an annual reset. This means that your cash value account will not be negatively impacted by the poor performance of the indices you are investing in.
• Although IUL naysayers emphasize the “cap” your insurer will place on your earnings every reporting period, they minimize that your policy contains a “floor” that establishes the minimum amount of interest your policy can earn each reporting period.

So then, let’s summarize here:

By using a properly designed IUL as a LIRP (life insurance retirement plan), the policyholder does not have to be concerned about the IRS capping their premium payments (contributions) each year, taxes and penalties on early withdrawals, mandatory distributions at age 70 ½, or paying taxes on the loans taken as an income stream.

And finally, the policyholder can experience stock market like returns without the risk of actually being in the stock market!

How to find which Companies offer the Best IUL?

Not only will the performance of your IUL be based on the performance of the indices your cash value is invested in, but the company you choose must have a favorable cap and floor rates that will remain stable.

Your advantage would be to work with an independent insurance advisor like Ogletree Financial who specializes in setting up indexed universal life policies for clients who are looking for an alternative investment program or are dissatisfied with the traditional plans they are already contributing to.

You can start a new IUL or convert a traditional investment to an IUL, either way, you’ll be rid of the IRS constraints that traditionally hamper medical professionals like emergency physicians from reaching their retirement goals and expectations.

 Here are the top five insurers we recommend for indexed universal life insurance and their financial stability ratings from the national rating services: 

1. North American Company

2. Midland National Life Insurance Company

3. Allianz Life

4. Symetra Life

5. Minnesota Life