Here are the key reasons why a Variable Universal Life
Insurance contract (“VUL”) can serve as a particularly
attractive LIAAP for you:
1. You can maximize its cash value build
up:
One of the key benefits of accumulating retirement assets
within a life insurance contract is that those assets grow
tax-free now and can be accessed tax-free later. Better
still, to “qualify” for that tax-free access you only have
to purchase a minimum amount of life insurance. This
approach, referred to as “max funding” the contract, uses
less of the growth/gains to pay for insurance and leaves
more to continue compounding within the contract. Note
that to reap the real benefit of this approach, one should
consider funding their Life Insurance retirement Plans
until age 65 or even Age 70 and if starting their plan late
you may want to “force feed” or contribute as much as
possible in the early years of the contract (i.e. 5-7 years)
to build up cash value even faster.
2. The plan offers superior investment
flexibility:
Like other types of retirement plans, a LIAAP offers you
the opportunity to participate in the growth potential of value during the loan so there’s essentially no charge to
professionally managed equity investment sub accounts take money out of the contract.
or portfolios, and to periodically rebalance investments
to maintain a specific asset allocation. In addition to
4. The plan “self-completes” if something
growth options, VUL contracts also typically offer fixed
happens to the owner:
accounts or other income options. So, once you retire
Rather than being a negative the life insurance
you can easily switch to options that will generate the
component of the plan offers a real advantage ensuring
income needed each year while keeping principal intact.
that if you die prematurely your financial plans can
3. You can access contract values
still be fulfilled. The insurance benefit that is passed
income tax-free to the beneficiaries can be used to
income tax-free whenever you want:
“complete” the process of funding the goals the contract
A LIAAP provides a very flexible source of tax-free
was initially established to address. Now with the new
accelerated riders, the death benefit can be accessed
income. Unlike 401(k)s and IRAs, there are no penalties
prior to death for disability or long term care. With these
for withdrawals before age 59 1/2 - and no minimum
features available one doesn’t have to die to fully reap
distributions required beginning at age 70 1/2. There
the benefits of a Life Insurance policy.
are also several ways to access LIAAP assets. First,
For more information about using Life Insurance as a
you can simply withdraw assets tax-free up to your cost
retirement strategy email concierge@bryanfinancialgroup.
basis and after that, you can take “wash” or no-cost
com to set up a free no obligation phone consultation.
loans against the policy’s value. Many policies assess
a charge on outstanding loans but also credit the same
or nearly same interest rate back to the contract’s cash
2
www.coloradohomeownermag.com
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