Why Realtors Are Turning To Universal Life as a Cash Accumulation Vehicle

Every working realtor knows that their industry is unlike any other.  Each and every sale is dependent upon the functioning of several independent parties.  For example, once a prospect has decided to put an offer in on a new home; the bank must approve the credit and financing, the appraisal must come in at needed value, and the seller (listing agent) must agree to the terms of the sale.  Only when all of the stars are aligned can the sale be facilitated.  Without close attention to detail, it is unlikely for the close to happen.  

Since every real estate agent is commission based, most realtors look for 3 main components with respect to investing long term.  First, the product must be liquid.  Every commission based realtor knows first hand there can be down times from close to close.  Liquidity is precious during periods of stagnant sales, especially in off-season months.  Second, the product must be protected.  In cyclical volatile markets like we are experiencing today, the concern of losing your money can be quite the burden.  Third, the product must be flexible to accommodate sporadic funding throughout the year.  Its impossible to tell when all your closes will happen throughout the year, making flexibility of funding an important part.    

For these reasons, more realtors than ever before are turning to uncapped strategies within indexed universal life (IUL).  IUL strategies allow for flexible funding and uncapped earnings that are very attractive.  With a couple of strategies that exist today, there is no limit on how much interest can be earned through annual reset.  Annual reset allows for market upside while eliminating all of the market downside.  In fact, from 01/01/2001 to 12/31/2015 many IUL policies would have averaged an annual rate of return of over well over 8% before the cost of insurance is taken out.   Liquidity is also a vital component of an IUL policy.  Over 80% of the funds can be accessed at any time during the year for needed liquidity.  Every other tax deferred vehicle that's available comes with a penalty from the IRS if a withdrawal is made prior to 59 1/2 years of age.   Finally, and most important, is the capability to have your IUL policy structured to allow for withdrawals exempt from federal income tax.  Since all IUL policies come with an accelerated death benefit, if properly structured IUL policies can allow for a personal loan to be taken against the death benefit that will not have to be repaid until death.  Upon death, the loan is deducted from the face amount (death benefit) and the remainder is passed on to your beneficiary tax free.  Its no surprise that these “living benefits” have attracted several commission based employees as an avenue for long term growth strategies.

To learn more on how an IUL strategy can benefit your practice, please feel free to email me at CalB@SafeMoneyAustin.com.