Case Study: Solving Multiple Needs With Indexed Universal Life

  • Originally published February 16, 2011 , last updated May 24, 2016

The following is a case that came into North American Company's Sales Support team. The clients wanted a product that could, if needed, provide a lump sum loan amount for future costs of education for a newborn child. But the primarily purpose was to provide a generally tax-free income stream at a planned retirement age of 65.

The clients were a male and female, age 28 and 26 respectively. They were both in good health, but since the husband was the primary breadwinner we decided to focus on insuring him. The couple decided they could afford $300 monthly. Their goal is to increase that premium to $400 monthly after 12 years when he turns 40. As is the case with most retirement supplement cases, we discontinue premium at age 65.

We decided to use Builder IUL, which is an indexed universal life insurance product. The Builder IUL is designed for long-term, non-guaranteed cash value accumulation. Again, the couple is looking for a lump sum loan at the beginning of the 23rd year to help recoup education costs, but they still want the policy continue to grow towards the primary goal of retirement supplement.

Builder IUL Illustration

With the Builder IUL, we were able to accomplish the clients' goals. As you can see, we've provided a lump sum loan of $60,000 at year 23 as well as an ongoing income stream of $57,000 annually running from age 66-90. And this was done using a fairly conservative assumed rate of 7.50% at the client's request.

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