In my business is in encouraging my clients to

In this article I encourage readers to consider usingindexed universal life insurance for any of three different financial goals: 1) To start a flexible and “self-completing” college savingsfund to help pay for your children’s education 2) To create additional(tax-free) income to supplement your retirement 3) As an alternative to long-term care insurance, since thelife insurance death benefit can be accessed to pay for assisted living ornursing home costs, if needed. Please note: I will ALWAYS recommend to my client that youmaximize your contributions to all “Qualified Plans” that you are eligible for(401k, Traditional and Roth IRA’s, etc.

) before you consider a financialcommitment to any form of permanent life insurance. Be wary of anyone advisingyou differently!The single greatest focus of my business is in encouragingmy clients to take full advantage of the United States’ tax code’s exemptionsfor life insurance. A lot of people who I talk with aren’t aware that when wepass away, our life insurance policy’s death benefit (the cash) doesn’t gettaxed when it’s paid out to our heirs. That is a great thing, and that’s why lifeinsurance is truly the best tax leverage available in our country’s tax code!This means that life insurance is a way to turn smallamounts of taxable money (your policy’s premiums paid over the years) into atax-free windfall for your family. Because of this tax break, your family couldend up with hundreds of thousands of dollars more than you’ve ever had in YOURbank account, and it’s all tax-free to them. But that’s just the beginning of my discussion about the taxbenefits of life insurance. Let’s go beyond the death benefit, and let’s talkabout the other tax-free features that makecash-value life insurance a marvelous investment opportunityBy the way, this is where I get super-excited about lifeinsurance!The Perfect InvestmentBut first, let’s take a moment and daydream about how the’perfect’ investment might be structured.

·        We would want our perfect investment to beTAX-DEFERRED. We would want all of our investment’s earnings (interest,dividends, capital gains etc.) to accumulate tax-free.

Being tax-deferred allows compounding on a larger sum of money since no part of the investment issubject to tax.·        We would want NO LIMITS to the annual amountthat we could contribute to our investment. Currently,we’re limited in how much we can contribute to our 401k’s, and our IRA’s.·        We would want EASIER DISTRIBUTIONS of our money.Currently, if we take money out of our Roth IRA’s before we hit age 59½ we geta 10% penalty, AND we’d have to pay ordinary tax on the income! Ouch.·        control ·        options ·        flexibility ·        certainty-you want to remove both stock marketrisk and tax risk·        guarantee ·        tax-free·        Accessible; take out the invested money at anyage we want, not waiting until we’re 59 1 Guess what? You can get all of these features with a certainkind of life insurance called Indexed Universal Life. Most people think of life insurance is something that paysoff after you’re dead.

That’s true, but what if I told you that you could havetax-free access to your life insuranceduring your lifetime so you could use it for yourself? You could begin moving large amounts of money from taxableaccounts into a tax-free permanent life insurance policy. The money grows tax-free inside the policy. It’s harder thanever today to make money on your investments so the last thing you want to dois share any of your hard-earned gains with the government.

You don’t if those gains are earned within a life insurancepolicy. If your money is going to grow it may as well grow tax-free. Life insurance is an investment, but it’s better than yourtypical investment accounts because it’s tax-free. Life insurance comes with something else that you can neverget from the stock market: a guarantee! But how much can you invest is up to you and the tax rules.You might want to invest the maximum you can into the policyif you’re approaching retirement (or already retired and looking to sheltermore of your taxable money into a tax-free vehicle). The mistake most people make when approaching retirement istrying to pay the least for the policybecause this is an investment–not an expense. If you are saving money in a bank account would you want toput in the most or the least? You want to put in the most because this is your savings,and you should look at indexed universal life insurance the same way, exceptthat the investment is tax-free.

So why would you keep moneygrowing in a taxable account when it can be transferred to a tax-freeinvestment? If you have taxable IRA funds you can in effect convert yourlife insurance paying tax now at low rates your distributions from your IRA andthen using that money to fund your life insurance investment.That accomplishes two things you reduce your future taxexposure in your IRA by taking distributions now and you build up a tax-freesource of retirement funds should you need them. If it turns out that you don’t need to tap into your lifeinsurance for retirement income then the life insurance benefit builds for yourfamily, also income tax-free, and formost people it will also be estate tax-free – depending on the estate taxexemption level applicable when you die.