What are the Tax Implications of Indexed Universal Life?

One of the great things about an IUL just as other cash value Life Insurance Contracts, is the cash you access as a policy loan isn’t income so it doesn’t trigger 1099s or other notices to the IRS. Not only is there no tax liability on those loans there are no reporting requirements either. You are not selling anything. There is no gain or loss. Proceeds are not income so you don’t owe any income tax.

What Happens if the Market Takes a Downturn?

IUL’s  have built in downside protection. With upside potential of a market index, all Indexed accounts are guaranteed to be credited a minimum stated rate of interest regardless of downward trends in the market.

If I want to Take a Loan, Do I Have to Repay it?

Yes, the loans you take do have to be repaid. The good news is, they do not have to be repaid while you are alive. Upon your death the insurance carrier will deduct your outstanding loan balance from your death benefit and pay the remaining amount to your beneficiaries as you have specified.

Those Illustrations Look Good. Are They Reliable?

While past performance is no guarantee of future results, since the inception of the Income Advantage IUL from Mutual of Omaha in March of 2016, the three crediting strategies have averaged 11.50%, 8.50% and 10.38%. Please call for an explanation of these crediting strategies.

Are There Tax Benefits to a Fixed Index Annuity?

Fixed index annuities offer tax-deferred growth, which means taxes are not owed until a withdrawal is made, If your purchase your FIA within and IRA there are different tax implications. Ask your tax professional any questions you have about tax impact if you are interested in an FIA.

Am I investing in the Stock Market?

Fixed index annuities do not directly invest in the stock market, but potential interest earned is based on an external equity or bond index. Some common indexes used are S&P 500® Index, and Dow Jones Industrial Average®(DJIA).

I Hear That Fixed Index Annuities Guard Against Loss?

FIAs are designed to provide an increased level of protection against prolonged market downturns. Although the rate of growth is limited, your principal and subsequent market gains are not at risk of loss due to bear markets or weak economic conditions. If the index upon which your annuity is based performs well, you will receive a percentage of that growth. Should the market take a nosedive, your principal and interest earned will not be lost.

Aren't There Investments With Unlimited Earning Potential?

Yes, there are and most carry with them the corresponding potential for unlimited loss. We have never had a client lose one penny of their FIA product. Also, in addition to being free of management and administrative fees, fixed indexed annuities have the potential to earn more interest than traditional fixed annuities and other safe money alternatives.

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