Whether you started retirement planning too late, or you worry you simply won't have enough retirement income to meet your needs in your later years, life insurance can help supplement your retirement income with policies that feature cash value growth potential. You can access cash value through policy loans or withdrawals and the money could be used for a generally tax-free income stream.1 The following product categories could help you fill the retirement gap in your financial strategy.
Life insurance that can protect, and provide
Indexed universal life (IUL) insurance is death benefit protection that also provides the opportunity to build long-term cash value by earning interest that is linked to the movement of a selected stock market index over a specific period of time. Although growth is based on a stock market index, your money is not actually invested in the market or in the applicable index. The product is subject to all policy fees and charges normally associated with most universal life insurance.
That's a mouthful, but essentially IUL products can protect your family and potentially provide for you and your family in the long run.
Bet you didn't know life insurance could do that.
With an IUL product, the policyowner can take advantage of the upward movement of a selected stock market index while being protected from a downward performance through the power of the 0% floor, meaning the index credited will not be less than zero percent.
In other words, a Midland National IUL policy can grant you the opportunity to build cash value without a negative index performance hindering your earning potential. The earning potential is subject to a cap or a maximum interest rate that is used in the calculation of the index credit. The cash value you build may be used in many ways, from college funding2 for your kids, to helping supplement your retirement income.
IUL can help you prepare financially for the chance of being diagnosed with a serious illness.
In addition to offering death benefit protection and cash value growth potential, IUL products may also include accelerated death benefits. These benefits allow the policyowner to access the death benefit while living.
Available at issue for no additional premium, these benefits allow the policyowner to accelerate a portion of the death benefit should the insured be diagnosed with a qualifying illness, subject to eligibility. The accelerated death benefit payment could be used for bills, making up for missed work due to your illness, family vacations, or in any other way you choose.3
Contact your financial professional to determine if IUL is right for you.
Don’t have a financial professional?
The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.
- Policy loans from life insurance policies generally are not subject to income tax, provided the contract is not a Modified Endowment Contract (MEC), as defined by Section 7702A of the Internal Revenue Code. A policy loan or withdrawal from a life insurance policy that is a MEC is taxable upon receipt to the extent cash value of the contract exceeds premium paid. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions. Policy loans and withdrawals will reduce cash value and death benefit. Policy loans are subject to interest charges. Consult with and rely on your tax advisor or attorney on your specific situation. Income and growth on accumulated cash values is generally taxable only upon withdrawal. Adverse tax consequences may result if withdrawals exceed premiums paid into the policy. Withdrawals or surrenders made during a Surrender Charge period will be subject to surrender charges and may reduce the ultimate death benefit and cash value. Surrender charges vary by product, issue age, sex, underwriting class, and policy year. Midland National Life Insurance Company nor its agents give legal or tax advice. Please consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.
- The primary purpose of life insurance is to provide a death benefit to beneficiaries. Because of the uncertainty surrounding all funding options except savings, it is critical to make personal savings the cornerstone of your college funding program. However, even a well-conceived savings plan can be vulnerable. Should you die prematurely, your savings plan could come to an abrupt end. To protect against this unexpected event, life insurance may be the only vehicle that can help assure the completion of a funding plan. In addition to the financial protection aspect of insurance, the tax-deferred buildup of cash values can be part of your college savings plan. Generally, if the policy is not a Modified Endowment Contract then tax-free withdrawals can be made up to the contract's cost basis. Moreover, if the policy is not a Modified Endowment Contract, then loans in excess of the cost basis are also tax free as long as the policy remains in force.
- The death benefit will be reduced by the amount of the death benefit accelerated. Since benefits are paid prior to death, a discount will be applied to the death benefit accelerated. As a result, the actual amount received will be less than the amount of the death benefit accelerated. An administrative fee is required at time of election.
Texas Residents: Receipt of acceleration-of-life-insurance benefits may affect your, your spouse’s or your family’s eligibility for public assistance programs such as medical assistance (Medicaid), Aid to Families with Dependent Children (AFDC), supplementary social security income (SSI), and drug assistance programs. You are advised to consult with a qualified tax advisor and with social service agencies concerning how receipt of such a payment will affect your, your spouse’s and your family’s eligibility for public assistance.
Life insurance policies have terms under which the policy may be continued in force or discontinued. Current cost of insurance rates and interest rates are not guaranteed. Therefore, the planned periodic premium may not be sufficient to carry the contract to maturity. The Index Accounts are subject to caps and participation rates. In no case will the interest credited be less than 0 percent. Please refer to the customized illustration provided by your agent for additional detail. The policy's death benefit is paid upon the death of the insured. The policy does not continue to accumulate cash value and excess interest after the insured's death. For costs and complete details, call or write to Midland National Life Insurance Company, Administrative Office, One Sammons Plaza, Sioux Falls, SD 57193, telephone (800) 923-3223.