What does it look like for a 40 year old female to contribute $11,000 a year into an index universal life insurance policy to save for retirement? I'm gonna show you.
Year one. We have a 40 year old female in Standard Health. The day one death benefit is $175,000. On year one, we're gonna contribute $11,000. The account is gonna be valued at $10,190 and there'll be an available cash value of $5,600. The death benefit will have raised to $186,000.
On year two, we'll contribute another $11,000. Our account will be valued at $20,800, and we'll have an available cash value of $16,500. The death benefit will end up being $197,000 by the end of year two.
Let's take a moment to point out the fact that when you earn interest inside your IUL, the account value is what you earn interest on. So the interest is gonna be credited to the $20,800 and then it'll be seen over here as part of your available cash value.
Year three, we contribute another $11,000. Our account is valued at $32,000, an available cash value of $27,800, and our death benefit is now at $208,000.
Jumping to year five, we've contributed a total of $55,000. At this point, our account is valued at $56,000 and we have an available cash value of $52,800. The death benefit on year five is $230,000.
Well, let's look at year 10.
On year 10, we have contributed a total of $110,000. Our account is valued at $127,000, and we have an available cash value of $127,000. Our death benefit is $265,000.
Now, jumping to year 15, we've contributed a total of $165,000. Our account is valued at $234,000. Same thing in our liquid cash value, and our death benefit is up to $367,000.
Now, one thing that I did not mention is the interest that's being earned to accomplish this. I am showing you a 5.95% annual return.
Jumping to year 20. Now we've contributed a total of $220,000. Our account is valued at $379,000, and we have a liquid cash value of the same thing. Our death benefit has increased to $508,000.
Jumping to year 25, the last year of funding, this person has contributed a total of $275,000 in the last 25 years. Their account is valued at $579,000. Same thing in their cash value, and their death benefit is at $705,000. This person is done funding their policy. They have $579,000 in their cash value. They're gonna turn that into a $50,000 annual retirement income, completely tax free, thanks to multiple tax codes in the Internal Revenue Code, and if you wanna find out more, reach out to Power Three Financial.