Certainly, Indexed Universal Life insurance is not for everybody. For example, if your concern is to make sure your mortgage is paid for if you died, most people would consider term life insurance as the best solution because it’s so affordable.
There are, however, many circumstances when Indexed Universal Life (IUL) is probably the best solution:
- You’ve maxed out your annual contributions to a 401(k) or IRA
- Your income is over the threshold limit for purchasing a Roth IRA
- You prefer not to wait until age 59 ½ before withdrawing from a traditional retirement product without being penalized
- You are concerned about how taxes will affect your retirement income
- You want a guaranteed death benefit as part of your retirement plan
If you share any of the above-listed concerns about your retirement planning, it’s essential that you at least consider the benefits that can offset each one listed. Transamerica Life Insurance is one of the top-rated insurance companies that we go to when a client has some of these concerns and should consider indexed universal life insurance.
About Transamerica Life Insurance Company
Founded in 1904 in San Francisco by Amadeo Giannini, the purpose or Transamerica was to provide financial services to the working class, not just the elite.
As Transamerica began operations and looked to grow its footprint, the company used certain acquisitions over the years to become one of the most favorable insurance companies currently under the Aegon N.V. umbrella of financial service companies.
In fact, in the company’s first 20 years of operations, it became one of the largest private banking services worldwide.
Transamerica’s Financial Ratings and Stability
Being a member company of Aegon, Transamerica’s financial ratings continue to remain at or near the top of all the national rating services. These ratings demonstrate that Transamerica Life Insurance Company is in a position to pay all covered claims and meet operating obligations going forward.Here are the company’s ratings for 2019:
|Rating Service||Current Rating|
|Standard & Poor’s||AA-|
|Moody’s Investors Service||A1|
Life Insurance Products from Transamerica
Although the focus of this article is Indexed Universal Life insurance, it’s important to note that Transamerica offers a comprehensive list of life insurance products to be able to meet the needs of all Americans and for any reason.
- Term Life Insurance – Provides coverage for a specified period (term) and is available at a much lower cost than other insurance products.
- Whole Life Insurance – The most commonly known type of life insurance, whole life insurance offers guarantees and benefits that many consumers feel are most important in life insurance protection.
- Universal Life Insurance – Universal life insurance offers both guaranteed life insurance coverage and a cash value component that allows the policyholder to build an asset that can be accessed via policy loans or partial surrenders. The UL is more flexible than term or whole life insurance because the policyholder has the ability to change premium payments and the death benefit to accommodate life events.
- Indexed Universal Life Insurance – Similar to traditional universal life insurance, the cash account in the IUL policy is linked to various indices and earns interest based on the performance of the stock market. The IUL policy can create considerable wealth over time that the policyholder can use as a tax-free stream of income.
- Final Expense Insurance – Final Expense Insurance is typically used to pay final expenses like funeral and burial costs of the insured rather than leaving this financial burden to surviving loved ones.
Indexed Universal Life (IUL) from Transamerica
Transamerica’s IUL is a solid solution for consumers who are concerned about the performance of their current retirement products and are frustrated with the constrains that the IRS has placed on the efforts to accumulate wealth for retirement.
Unlike the 401(k) or IRA provided by your employer, there are no contribution limits that can interfere with your wealth accumulation goals.
Unlike the 401(k) or IRA provided your employer, there are no early withdrawal penalties if you wish to withdraw from your IUL before age 59 ½.
Unlike the 401(k) or IRA provided by your employer, there is no required minimum distribution rule when you reach age 70 ½.
Unlike the 401(k) or IRA provided by your employer, there is no income tax liability created when you withdraw money from your IUL using policy loans and there is no income tax liability for your beneficiary when they receive the death benefit after you die.
How does the Transamerica IUL provide Tax-Free Retirement Income?
When you pay the premium on your IUL, a portion of the premium is used to pay for the cost of life insurance and any fees or expenses. The remainder of that premium is placed in a cash account which is linked to a fixed income account or linked to one or more indices.
To accumulate as much wealth as possible, policyholders should consider linking to index accounts so they can earn interest in their cash account based on the performance of the index or indices the account is linked to.
Your IUL will contain two very important metrics which most agents point to when offering the Indexed Universal Life insurance product they believe will work best for your circumstances:
- CAP – The CAP in your policy represents a limit on the amount of interest your policy can earn at the end of a crediting period. For example, if your CAP is 12% and your market index earns 14%, Transamerica will credit your cash account the CAP which is 12%.
- FLOOR – The FLOOR in your policy represents the minimum amount of interest that your cash account will be credited at the end of a crediting period. For example, if the FLOOR in your Transamerica IUL is 0% and the index loses 3%, your cash account will not be impacted by the loss in the market because of your FLOOR.
What makes the Transamerica IUL stand out among the Rest?
When compared with other IUL policies, Transamerica stands out because of favorable CAP and FLOOR rates, the financial stability of the company, highly trained and reputable independent representatives, and the solid No-Lapse Guarantee provided by Transamerica Life Insurance Company.