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Six Compelling Reasons to Consider IUL in Retirement Planning

How Does IUL Not Lose Money

Reviewed By: Rob Pinner

Rob Pinner Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

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Fact Check By: Holly Mitchell

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Many companies have started offering indexed universal life insurance (IUL) to their customers for implementing an IUL retirement account.

Each IUL company is different.

Each company has its own advantages and disadvantages that you should take note of when you’re shopping for coverage and considering indexed universal life insurance retirement.

Although only in the marketplace for about twenty years, new policy sales of Indexed Universal Life (IUL) insurance has grown to over $2.1 billion as of the end of 2018.  That is more than an 11% increase over 2017.

It appears that 2019 will see even more consumers looking for better ways to plan for retirement.  We have already seen several new indexed universal life insurance to hit the market place.  North American has the Builder Plus, Midland National has CV Max and Symetra has the Accumulator Select.

Needless to say, indexed universal life insurance does have its fans in the world of financial and retirement planning.  IUL for retirement is typically used as a cash accumulation product and goes by several different names.  A life insurance retirement plan or LIRP is used by many advisors to describe indexed universal life as a retirement plan.

The perks this product brings to the table are just too good to overlook. Yes, there are many reasons to use IUL for retirement planning, but, as with any insurance product, there are plenty of naysayers out there that claim otherwise.

IUL insurance policies can be an excellent option for life insurance coverage, but they can also be confusing. It’s important to understand all of your options when deciding what is the best kind of life insurance policy to purchase and how to create your IUL savings account.

This article is going to explore the different advantages of IUL and reasons that you should consider purchasing one of these plans.

Let’s Look at Six Reasons to Use IUL for Retirement Planning

The Safety Factor

Investors who have been seriously burned by declining returns in the bond, equity, and real estate markets certainly understand the value of a guarantee that their annual returns will never be a negative number. That coveted guarantee is exactly what IUL is famous for. Because of the annual reset provided in the contract, current values cannot be negatively impacted by a down market which will preserve the funds in your IUL retirement account.

Tax-Free Cash Flow

While other well-known and popular investment vehicles may create a tax burden for the investor, the IUL eliminates the drawback since cash flow can be created by accessing accumulated funds through contract loans that are immune from federal, state, and local income taxes. These cash producing loans are also free of the alternative minimum tax that can be levied against most other investment products.

When you consider the earnings in your account along with the tax-savings benefits, the IUL just keeps looking better and better. For an accurate and personalized quote along with some expert advice, go ahead and take a minute to complete the quote form on the left side of the page.

Higher Positive Returns

As the market has suffered over the last decade with a lower than expected return on investment, traditional investment products have become somewhat unattractive to savers. With the IUL, if the selected index performs well over the measured period, your contract can experience an interest-earning that is considered very attractive. In fact, some IUL products include interest crediting formulas that will compare multiple indices and then more heavily weight the better performers which makes indexed universal life insurance for retirement a significant retirement planning option.

The Available Death Benefit

Although death statistics can be very disappointing, it’s important to take into consideration the financial devastation that can result from the unexpected death of a wage earner. Reports provided by the Life and Health Insurance Foundation for Education indicate that a man at 35 years old has more than a one-in-six chance of dying before retirement, and a man at 45 years old has more than a one-in-seven chance of dying before age 65.

Fortunately, your IUL policy provides a tax-free death benefit that mitigates this risk by providing the funds needed for your family and surviving loved ones to continue with their lives without excessive worries about finances.

Coverage for Life without Paying for Life

An unexpected bonus that comes with your IUL retirement account is that once you stop paying periodic premiums and begin taking cash through policy loans, your insurance coverage doesn’t end but remains a component of your IUL retirement plan.

In fact, many policyholders continue to be covered for the rest of their lives without having to keep paying additional money into the contract. You can learn more about these unique features of the IUL by calling Ogletree Financial Services at 1-800-712-8519 or just request a quote to the left of this page.

Return of Premium

Ogletree Financial, along with the help of some sophisticated software, can design a legitimate scenario for you where you can be assured that at a future point in time, you can cancel your policy and have the insurer pay you, at least, the amount that you have paid in over time. Although this is not the same concept that some Term policies offer, the final accounting is basically the same.

You pay in a designated periodic premium for a predetermined amount of time and then cancel the policy and receive enough money from the cash account that it is equal to your premiums paid in. The return of premium is just another level of safety for you, the consumer.

IUL insurance policies are not perfect for every consumer. In fact, the word “Perfect”, should probably not be attached to any investment product until the end of the investment period when the investment performance can be legitimately rated. The IUL for retirement is, however, one of the best methods for supplementing a retirement plan and providing life insurance coverage at the same time.

If you’re looking to get simple and cheap life insurance, then an IUL plan is not going to be the best option for you. There are several more affordable plans that you can choose from, but if you want to get a policy that is going to give you additional financial advantages, then an IUL can be a great option.

Compare IUL with Traditional Retirement Plans

FeaturesIULRoth PlanQualified Plans
401(k), IRA, Etc.
Conventional Pension
No market riskYes
Death Benefit Yes
Accelerated Death Benefit and LTC RiderYes
Loans with no repayment requiredYes
Withdrawals accessible prior to age 59 1/2
MDR at age 70 1/2YesYes
Tax-Free EarningsYesYesYes
Earnings not counted toward Combined IncomeYesYesYes
Tax-Free Death benefit to heirsYesYes
Legislation FriendlyYes

How Much Life Insurance Do You Need?

Regardless of which type of policy you buy, it’s vital that you purchase enough protection for your family. Not having enough life insurance is one of the worst mistakes that you can make for your loved ones. There are several different factors that you’ll need to account for before you buy insurance coverage.

The first number that you should crunch is your debts and other final expenses that your family would be responsible for if you were to pass away. The primary goal of your life insurance is to give your loved ones the money that they need if something tragic were to happen to you. Be sure to add up your mortgage, student loans, and burial fees. All of these can add up to thousands and thousands of dollars of debt, and that’s where your insurance plan comes in.

The next number that you should add up is your paycheck. The secondary goal of your insurance policy is to replace your paycheck. If you’re one of the main income earners in your home, they would struggle if something were to happen to you. That’s where your life insurance comes in. It gives them the money that they need to get through a difficult time without sacrificing their standard of living.

We know that shopping for life insurance is not a fun experience. There are dozens of different factors that you’ll need to consider and several types of plans that you’ll need to compare. Instead of wasting hours and hours calling different companies to compare plans, let one of our independent insurance agents do all of the hard work for you. Our independent agents work with dozens of highly rated companies across the nation.

Every insurance company is different, and they all have different medical underwriting standards, which means that you’re going to get drastically different rates depending on which company that you get the quote from. If you want to get the lowest premiums, it’s important to compare dozens of quotes before you decide which one is going to work best for you, and our agents can help you do that in a matter of minutes. We can bring you the best personalized quotes and connect you with the perfect policy for you.

You never know what’s going to happen tomorrow, which means that you shouldn’t wait any longer to get life insurance protection for your family. We know that isn’t a frustrating and overwhelming process, but it doesn’t have to be. Our experienced agents are here to help you get quality insurance at an affordable price. It’s our mission to save you money and get your family the protection that they will need.

Who We Recommend for IUL


retirement planning quotes


So that we can offer realistic and competitive retirement planning quotes, we are continuously updating our database for the companies that are offering the best Cap and Floor rates along with competitive insurance pricing and outstanding customer service. Listed below are the companies we use the most with a link to each company’s review page. All of them are very good candidates for indexed universal life insurance and should be considered when using IUL for retirement income.

North American Company for Life and Health

North American stays at the top of our preferred carrier list because of continuous high ratings from all the national rating services and a complete portfolio of competitively priced insurance products.

Midland National Life Insurance Company

With its consistent rating of A+ from A.M. Best, we know that Midland National will deliver on its products and promise to pay. They also offer a complete line of life insurance products and consistently deliver earnings on their IUL products.

Minnesota Life Insurance Company

With roots planted as far back as 1880, we consider Minnesota Life as a go-to carrier for retirement planning with indexed universal life insurance. Minnesota Life is a member of the Securian Financial Group and a top performer when it comes to premium and customer and claims service.

Symetra Life Insurance Company

With insurance ratings of A or better, Symmetra Life continues to be a member of our top ten insurers for IUL and other life insurance products.

American National Life

American National Life is another life insurer with over 100 years experience and has grown its footprint across American. With high ratings from the national rating services and competitively priced insurance products, we are proud to represent American National Life.

Lincoln Financial Group

With a company name like Lincoln Financial, it’s difficult to imagine this company being anything less than excellent and that’s exactly the way the rating services feel about their financial stability:

  • A+ by A.M. Best Company (the second highest rating out of 16 total)
  • AA- by Standard & Poor’s (the 4th highest rating out of 21 total)
  • A1 by Moody’s Investor Services (the fifth highest rating out of 21 total)
  • A+ by Fitch Ratings (the fifth highest out of 19 total)

With three IUL products to choose from, Lincoln National is continually one of our go-to carriers for retirement planning with life insurance.

Penn Mutual

Penn Mutual is another highly rated insurer with an insurance background starting 1847. Penn’s Accumulation Builder Advantage IUL product is a stand-out in the marketplace and an excellent choice of IULs for retirement planning.

Transamerica Life Insurance Company

While maintaining an A+ rating with A.M. Best year after year, Transamerica’s s continues to deliver competitively priced IUL products with outstanding customer service.

If you have any questions about IUL or you want to explore other options for life insurance, feel free to contact us at any time. We would be happy to answer those questions and ensure that you’re making an educated choice for your family. To find out what will work best for your individual needs, and to get competitive retirement planning quotes, take a minute to complete the quote request form on the left or give us a call at 1-800-712-8519.

Frequently asked Questions

What are the top 3 companies you recommend?

minnesota life insurance company

Although company recommendations largely depend on your goals, our top 3 insurance companies that are recommended are:
1. North American Company for Life and Health
2. Midland National Life
3. Minnesota Life

How can I take income tax-free from my IUL?

return of premium term life insurance - ATM

Anytime you withdraw funds from your IUL, you should take the withdrawal as a loan because the IRS doesn’t consider a policy loan taxable income. Yes, you will be charged interest but the tax savings will be more than enough to offset any interest charges.

Do I have to pay back IUL policy loans?

It’s your choice. You can pay back your loans or you can opt for letting the company deduct any outstanding loans from your death benefit.

What should I do with my 401(k) – should I keep investing?

STOP icon

In his book, The Power of Zero, David McKnight recommends that you continue investing in your 401(k) until you reach the employer’s match limit and then divert those contributions to your IUL for future tax savings.

4 Responses

  1. Good Day

    I read your very insightful article posted on October 2019. I have a question as it relates to the IUL product. I was recently offered this product from a insurance company and I was sold until I believe I was provided some inaccurate information.

    My plan is to move overseas to the Carribean within the next 4 years. I am planning on securing contractual work within the US if possible to ensure a regular stream of income, however that is not guaranteed. The agent reported that I am able to utilize the long term care benefit even while living overseas in the event at least 2 of the 5 or 6 activity of daily living skills have been compromised. Agent also reported that I am able to withdraw money from my IUL even while living overseas and penalty free.

    I hope that I am clear in my question. I was just thinking that this appears to be a great product so why aren’t more people signing up; especially if their plan is to move overseas.

    Please advise….

    1. Hi TF. I would need to know more about the company that the policy is being offered from. Feel free to give us a call to discuss it with you.

  2. Hey Doug,

    I'm 30 y/o and I've had my IUL for the last 3 years.

    After sitting down with an advisor and hearing "the pitch," I decided to leave my 401K and go via this other investment route.

    However, the one thing that has always bothered me about my experience is that my guy told me there was no charge for HIS services….. well in my naive position I heard free. I didn't realize that HIS services were not the INVESTMENT services (aka insurance charge, or that part of the $### premium goes to pay for life insurance and expenses in the policy).

    That said, Question 1:
    What would you say is the average monthly "insurance charge" based on a variety of life policy coverages? Is $96/mo for a policy above/at/below what one would expect to pay?
    Yes- I may in turn have a great life insurance
    Yes- my yield by retirement will out way the insurance cost now
    But- $96/mo is a very high percentage of what I put in every month. A cost I was never directly told about, and (again to my own naivety) looked over before signing the dotted line.

    Question 2:
    Sales pitch: taxes on the seeds not the harvest!… higher returns!… 0% floor!… no caps!
    I was given an 9% IUL average return vs 6% 401K average. – SOUNDS GREAT TO ME!

    What I didn't think about at the time was employer 401K matching.
    ex. I put 5% = $200 and I'm matched $200. If only paying half of the investment wouldn't my return be double that which i'm contributing. Turning that 6% more like 12%?

    Question 3:
    Coming from the position of the average working class- leaving the norm with regard to life retirement, security, and finances was a difficult choice to make, and despite the articles and cute little cartoons explaining IUL, there's a lot that goes into it. It's hard not to feel like you are being swindled by the big insurance company into giving them all your money and hoping you will have a future in retirement. I've tried to explain it to friends and family but have been unable to convince them to consider the change.

    Any clearer insight as to the feasibility this may have for us in the middle class?


    1. Hi Syd,
      Those are a lot of questions but I will try to be brief. I just texted you so feel free to call me for a policy review.
      Question 1 – Expenses are based on premium paid, age and rate class and the amount of death benefit. You can ask your agent for a policy expense report. A properly structured IUL should buy the least amount of life insurance possible and stay IRS compliant.
      Question 2 – A 9% average return sounds high, but it is possible. Today caps are around 10% – 12% range. Most IUL policies will only illustrate rates around 6% – 7%.
      Question 3 – I feel that this is very feasible for the middle class. We have clients that put in anywhere from $200 per month to $20,000 per month. The goal here is to beat taxes, inflation and be risk averse. An IUL can do all of these while building lifetime tax free income. You have to be patient.

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