Indexed Universal Life (IUL) is a type of life insurance policy that combines life insurance protection with an investment component that allows policyholders to earn interest on their cash value. One of the main benefits of an IUL policy is that the cash value grows tax-deferred, meaning that policyholders do not have to pay taxes on the interest earned until they withdraw it.
When it comes to how much money can be put into an IUL policy, the answer depends on several factors. According to a guide by IAMS, an insurance marketing organization, the amount of money that can be put into an IUL policy is typically determined by the policy's "annual premium limit."
The annual premium limit is the maximum amount of money that can be contributed to an IUL policy each year, and it is based on the policyholder's age, health, and the death benefit amount. The younger and healthier the policyholder is, the higher the annual premium limit will be.
The guide by IAMS provides an example of how the annual premium limit works. For a policyholder who is 35 years old and in good health, the annual premium limit might be around $40,000. This means that the policyholder can contribute up to $40,000 to their IUL policy each year.
However, it's important to note that the annual premium limit is not a hard and fast rule. Depending on the insurance carrier and the policy, the annual premium limit may be higher or lower than the example given by IAMS.
Indexed Universal Life can hold more than you think
Another factor to consider when determining how much money can be put into an IUL policy is the policy's "cumulative premium limit." The cumulative premium limit is the maximum amount of money that can be contributed to an IUL policy over its lifetime.
Again, the cumulative premium limit will vary depending on the insurance carrier and the policy. Some policies may have cumulative premium limits that are several million dollars, while others may have lower limits.
In conclusion, the amount of money that can be put into an IUL policy depends on several factors, including the policyholder's age, health, and the death benefit amount. The annual premium limit and the cumulative premium limit are important considerations when deciding how much to contribute to an IUL policy. It's important to work with a knowledgeable insurance agent to determine the best policy and premium amounts for your individual situation.
