Let’s say you have a $1 million in your IUL policy by Year 11.
If you let your IUL grow without taking income, using average rates of return, let’s say in another 7-7.5 years, you could have $2 million.
If you were to pass away, the income-tax-free death benefit payout would typically be about $2.1M, because you’re charged only for the the net amount at risk, which in this scenario is $100K.
With a level death benefit, your cash value becomes part of the death benefit, and the cost of insurance gets cheaper as your cash grows. This can maximize your rate of return, since less is deducted for insurance costs.
If you opted for an increasing death benefit, the cash value would sit on top of the death benefit. However, the cost of insurance would remain higher, reducing your overall returns by 2-3% annually instead of 1%. Be aware, this can significantly impact long-term growth.#IULGrowth #LevelVsIncreasing #SmartFinancialPlanning