If you are considering Indexed Universal Life insurance (IUL) for a guaranteed death benefit and a vehicle to create wealth for retirement, it seems logical that you would want to partner with one of the best life insurers in the marketplace. As an independent agency, Structured Wealth Strategies commonly recommends Minnesota Life for IUL because of outstanding performance over the years we’ve represented them.
About Minnesota Life Insurance Company
Minnesota Life was orignially founded as Bankers Association of Minnesota in 1880 but changed its name and organization strucure in 1901. Since the company’s structure was changed to a mutual company (owned by its policyholders) the name was changed to Minnesota Mutual Life Insurance Company as well.
Like most life insurers, Minnesota Life went through some turbulent times over the years but all the while maintaining its committment of excellence to its clients and in 2005 the company became a top-performing subsidiary of Securian Financial Financial Group. As Securian’s enterprise brand and top performer, Minnesota Life has managed to post impressive numbers over the last decade:
Minnesota Life Financial Stability
Certainly, it’s logical that investors should choose a financially stable organization to accumulate wealth over the long term. Fortunately, with 21st century technology, life insurance and financial product shoppers can determine the financial stability of companies they are consider in a manner of minutes and since life insurance is simply a promise to pay in exchange for premium, the company you select to do business with must be rock-solid.Here are the financial ratings for Minnesota Life:
|A.M. Best||A+ (Superior)|
|Standard & Poor’s||AA- (Very Strong)|
|Moody’s Investors Service||Aa3 (Excellent)|
|Fitch Ratings||AA (Very Strong)|
Minnesota Life Indexed Universal Life (IUL)
Indexed Universal Life insurance is a solid solution for individuals who are dissappointed with the IRS constraints that are place on traditional investment products. Many high-income earners get frustrated when they discover their 401(k) or IRA will eventually come up short when it comes to accumulating the wealth they need to meet the retirement goals and expectations.
The IUL mitigates those concerns because tax-hungry legislators have not yet canabalized the product like they have with traditional investment vehicles. Investors need not be concerned about income limits, contribution limits, early withdrawal penalties, and required minimum distributions with thei IUL plan. In fact, any concern about tax liability during retirement years can be mitigated as well.
When you compare Minnesota Life’s IUL to traditional investment products, there are glaring differences and a long list of benefits that you’ll not find in your typical investment plan:
- Flexible premiums that allow the insured to adjust their premium payments to accommodate life events and cash-flow issues.
- A flexible death benefit that allows the policyholder to increase or decrease the benefit amount to align with changing needs over time.
- Allows the policyholder to accumulate significant wealth over time on a tax-deferred basis because the cash value account grows based on the performance of various market indices.
- The cash in the IUL can be accessed at any time without tax liability using policy loans.
How the Minnesota Life Insurance IUL Works
A properly structured IUL will be set up by an insurance professional in a manner that will address the life insurance needs and wealth accumulation needs of the applicant. During the quoting stage, the insurance professional will determine the premium required to cover the cost of insurance and reach the financial goals. Once the underwriting process has completed, a premium amount will be established by the insurance company and the insurance professional.
As we mentioned previously, a policyholder can pay as much premium into the policy as long as the policy doesn’t become a modified endowment contract which would jeopardize the tax advantages.
Here’s a simple explanation of the process:
- The premium is sent to the insurance company and the cost of insurance and applicable fees are deducted.
- The balance of the premium is placed in a cash account that is linked to one or more market indices.
- At the end of each reporting period (commonly a year), the cash account is credited based on the performance of each index and subject to the “Cap” rate in the policy. For example, if an index earned 14% but the Cap in the policy is 12%, the cash account would be credited 12%. If the performance ended in a negative amount, the “Floor” rate in the policy (generally 0%) would be credited meaning the cash account would not lose money in a down market.
- When the policyholder decides to withdraw money from the cash account it is taken as a loan which is not considered income and therefore nontaxable. The loan can be paid back anytime the policyholder chooses or not at all.
- When the insured dies, the death benefit will be paid to the designated beneficiary tax-free but subject to any outstanding loans or unpaid interest.
Minnesota Life IUL Products
Like other life insurance companies, Minnesota Life offers several types of IUL products to accommodate the circumstances and goals of the applicant. Although each type of product is considered an IUL policy, each is designed to provide a specific solution for the policyholder:
Value Protection IUL
This product’s focus is the life insurance death benefit and contains a built-in no-lapse guarantee. The policy was designed for clients looking for low-cost permanent life insurance that would obtain some growth in cash value.
Eclipse Protector IUL
This policy is for consumers who want a budget-friendly IUL policy where the death benefit is primary and cash growth is secondary.
The Orion IUL was designed for consumers who want permanent life insurance protection but are even more concerned with accumulating wealth that can be converted to tax-free income stream during retirement.
This policy was designed to cover partners or a married couple and pays the death benefit upon the death of the second insured. It is often used to help heirs deal with inheritance or estate taxes and for surviving children with special needs. The policy offers a guaranteed death benefit combined with significant cash accumulation.