The most common ways of structuring indexed universal life insurance is for retirement and executive bonus plans, according to Frye.
“Unlike a 401(k) or other qualified plan that is funded with pre-tax money, IULs are funded with post-tax money allowing the insured to take tax-free withdrawals from the policy,” he says.
You won’t have to follow a traditional retirement path, either. Unlike retirement accounts, which prevent you from withdrawing until you’re at least 59 1/2, you can access the funds at any age, which could be useful for individuals on the FIRE (Financial Independence, Retire Early) track.
Plus, Frye says you don’t have any minimum required distributions (RMD) “since the IRS doesn’t consider life insurance as an investment.”