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IUL Retirement Account

IUL retirement account
Insurance Quotes 2 Day Team

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA.  Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

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.

Rob Pinner   &

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

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

 5 minute read

Many life insurance companies have started offering an IUL retirement account to customers who are risk averse and want to pay less taxes in retirement.

Each IUL retirement account 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.

IUL Retirement Account Growth

Although only in the marketplace for about twenty-five years, new policy sales of Indexed Universal Life (IUL) insurance continue to grow and, according to LIMRA, account for 23% of all life insurance sales in 2023 year to date.

It appears that 2024 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 marketplace.  Allianz Life has the Life Pro+ Advantage,  North American has the Builder Plus 3,  and Symetra has the Accumulator Select.

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 used for its ability to produce an income tax-free distribution.  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 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 who claim otherwise.

IUL insurance policies can be an excellent option for retirement planning and 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 the reasons that you should consider purchasing one of these plans.

Let’s Look at Six Reasons to Use an IUL Retirement Account

The IUL Account Safety Factor

Investors seriously burned by declining returns in the bond, equity, and real estate markets certainly understand the value of guaranteeing 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 retirement account income

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 policy loans without paying federal, state, and local income taxes. These 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 and the tax-savings benefits, the IUL retirement account keeps looking better and better. 

High Positive IUL 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. 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 in an IUL Account

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 their lives without excessive worries about finances.

Lifetime Coverage in an IUL Account

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.

Many policyholders continue to be covered for the rest of their lives without having to keep paying additional money into the contract. 

Return of Premium

With the help of some sophisticated illustration software, we 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 over time. 

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

IUL retirement accounts are not perfect for every consumer. The word “Perfect” should probably not be used to describe any financial product until the end of the investment period when the investment performance can be legitimately calculated. The IUL retirement account can be an ideal method for supplementing your qualified 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 will not 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.

IUL Retirement Account vs Traditional Retirement Accounts

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 in an IUL retirement account?

Since IUL retirement accounts are life insurance policies, you should also have a need for life insurance.  We can talk about the proper IUL policy design with you to determine how much you need. The proper IUL policy design will probably not be an adequate amount of life insurance for you.  You can use a term life policy to supplement the amount.  Term is very cheap and can cover you for up to a 40-year period.

You never know what will happen tomorrow, which means that you shouldn’t procrastinate. We know that the process can be overwhelming, but it doesn’t have to be. We have helped thousands of folks just like you create an IUL retirement account that will stand the test of time. 


If you have any questions about IUL retirement accounts, feel free to contact us at any time. We would be happy to answer those questions and ensure 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 options, take a minute to use the IUL calculator on this page or give us a call at 1-800-712-8519.

Frequently Asked Questions

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?

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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.


author avatar
Doug Mitchell, CLU Independant Advisor
Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent almost 30 years in the life insurance industry and has also held licenses to sell securities, long-term care insurance and home and auto insurance. Doug is a Top of the Table Million Dollar Round Table member (MDRT).  MDRT is a global, independent association of the world's leading life insurance advisors.  For two years, Doug served as President of the Auburn Opelika Association of Financial Advisors and has been a member of the Million Dollar Round Table. He obtained Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award. Later in his career with New York Life he was an Executive Council Member. Doug currently serves as President of Ogletree Financial, a managing general agency serving life insurance agents and clients in all parts of the United States. Today, Doug’s main focus is servicing 1000s of policyholders and growing the agency through the reach of