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IUL Retirement Income: How Does It Work, and How Much Could You Receive?

Explore a detailed Indexed Universal Life insurance illustration showing how premiums, cash value, potential lifetime retirement income, and death benefits may change over time.

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Illustrated Retirement Strategy

$1,100,000
Total planned premiums over 20 years
$140,859
Planned annual lifetime income benefit starting at age 65
$2,431,664
Illustrated net death benefit at age 65

Non-guaranteed hypothetical illustration.

Understanding IUL Life Insurance

Life Insurance Protection With Potential Retirement Benefits

Indexed Universal Life insurance is permanent life insurance that may accumulate cash value and provide additional options for retirement planning.

Unlike direct stock market investments, indexed interest crediting is determined by the policy's contractual formula, subject to applicable caps, participation rates, charges, and other terms.

The following example shows a 45-year-old individual planning to contribute premiums for 20 years and begin receiving supplemental retirement income at age 65.

Illustrated Values at Age 65

Understanding the Key Numbers

Premium Outlay

$1,100,000

Total planned premiums over 20 years.

Annual Lifetime Income Benefit

$140,859

Illustrated annual income starting at age 65, subject to rider conditions.

Accumulated Value

$2,147,550

Illustrated policy value before outstanding policy loans.

Cash Surrender Value

$2,002,154

Illustrated net surrender value after the loan balance.

Net Death Benefit

$2,431,664

Illustrated net amount payable to beneficiaries at age 65.

Funding Schedule

20 Years

$100,000 annually for years 1–2; $50,000 annually for years 3–20.

These are values within one policy, not separate amounts that can all be collected independently. All values shown are non-guaranteed.
How to Read Your IUL Illustration

What Does Each Column Mean?

Premium Outlay

The planned premium contribution for that policy year. Premiums help support insurance protection, policy charges, and potential cash value.

Planned Lifetime Income Benefit

The annual income amount illustrated under the policy's retirement income strategy. Benefits depend on rider eligibility, contractual provisions, and assumptions.

Accumulated Value

The illustrated accumulated policy value before subtracting outstanding policy loans. This is not necessarily money available for immediate withdrawal.

Cash Surrender Value

The illustrated amount remaining after applicable deductions and policy loans if the policy were surrendered. Surrender ends coverage and may create taxes.

Net Death Benefit

The illustrated amount payable to beneficiaries upon death, subject to policy provisions, loans, and other applicable adjustments.

Why Do Values Change?

Premiums, indexed interest credits, insurance charges, loans, loan interest, and rider activity can all affect policy values.

Complete IUL Retirement Illustration

Every Policy Year, From Age 45 Through Age 120

Review the entire 76-year projection below. All policy years are displayed in chronological order, including the 20-year premium funding period and the illustrated retirement income period beginning at age 65.

Current illustrated values: The table uses non-guaranteed assumptions from the supplied illustration. Actual values may differ significantly. The insurer's complete approved illustration also contains guaranteed and alternative values.

On mobile devices, swipe horizontally to see every financial column. All 76 rows are shown.

Policy
Year		 Age Premium
Outlay		 Planned Lifetime
Income Benefit		 Accumulated
Value		 Cash Surrender
Value		 Net Death
Benefit
145$100,000$0$90,175$60,833$1,410,663
246$100,000$0$186,301$158,399$1,506,789
347$50,000$0$239,515$213,118$1,560,003
448$50,000$0$296,018$271,193$1,616,506
549$50,000$0$356,135$332,948$1,676,623
650$50,000$0$420,087$403,898$1,740,575
751$50,000$0$488,040$474,822$1,808,528
852$50,000$0$560,224$550,109$1,880,712
953$50,000$0$636,944$630,051$1,957,432
1054$50,000$0$720,261$716,748$2,040,749
1155$50,000$0$817,625$817,625$2,138,113
1256$50,000$0$921,276$921,276$2,241,764
1357$50,000$0$1,031,582$1,031,582$2,352,070
1458$50,000$0$1,149,004$1,149,004$2,469,492
1559$50,000$0$1,273,945$1,273,945$2,594,433
1660$50,000$0$1,406,767$1,406,767$2,727,255
1761$50,000$0$1,547,793$1,547,793$2,868,281
1862$50,000$0$1,697,674$1,697,674$3,018,162
1963$50,000$0$1,857,138$1,857,138$3,177,626
2064$50,000$0$2,026,742$2,026,742$3,347,230
2165$0$140,859$2,147,550$2,002,154$2,431,664
2266$0$140,859$2,273,469$1,973,954$2,405,913
2367$0$140,859$2,404,684$1,941,803$2,374,646
2468$0$140,859$2,541,399$1,905,348$2,337,386
2569$0$140,859$2,683,829$1,864,220$2,293,633
2670$0$140,859$2,845,798$1,831,617$2,258,487
2771$0$140,859$3,015,849$1,795,421$2,187,482
2872$0$140,859$3,194,448$1,755,399$2,106,789
2973$0$140,859$3,382,143$1,711,356$2,015,749
3074$0$140,859$3,579,582$1,663,152$1,913,723
3175$0$140,859$3,787,532$1,610,719$1,800,096
3276$0$140,859$4,005,183$1,552,367$1,752,626
3377$0$140,859$4,232,879$1,487,498$1,699,142
3478$0$140,859$4,470,953$1,415,454$1,639,001
3579$0$140,859$4,719,711$1,335,486$1,571,472
3680$0$140,859$4,979,427$1,246,752$1,495,723
3781$0$140,859$5,250,328$1,148,297$1,410,813
3882$0$140,859$5,532,651$1,039,103$1,315,736
3983$0$140,859$5,826,560$918,003$1,209,331
4084$0$140,859$6,132,144$783,678$1,090,285
4185$0$140,859$6,449,124$634,354$956,810
4286$0$140,859$6,777,271$468,220$807,083
4387$0$140,859$6,903,596$70,606$415,786
4488$0$140,859$7,461,622$73,257$446,339
4589$0$140,859$8,053,071$76,008$478,662
4690$0$140,859$8,679,944$78,862$512,859
4791$0$140,859$9,344,365$81,823$455,597
4892$0$140,859$10,048,586$84,895$386,353
4993$0$140,859$10,794,990$88,083$303,982
5094$0$140,859$11,586,108$91,390$207,251
5195$0$140,859$12,424,618$94,821$94,821
5296$0$140,859$13,313,361$98,381$98,381
5397$0$140,859$14,255,350$102,075$102,075
5498$0$140,859$15,253,774$105,908$105,908
5599$0$140,859$16,312,019$109,884$109,884
56100$0$140,859$17,433,668$114,010$114,010
57101$0$140,859$18,622,524$118,290$118,290
58102$0$140,859$19,882,615$122,732$122,732
59103$0$140,859$21,218,212$127,340$127,340
60104$0$140,859$22,633,841$132,121$132,121
61105$0$140,859$24,134,300$137,081$137,081
62106$0$140,859$25,724,676$142,228$142,228
63107$0$140,859$27,410,358$147,568$147,568
64108$0$140,859$29,197,062$153,109$153,109
65109$0$140,859$31,090,843$158,858$158,858
66110$0$140,859$33,098,123$164,822$164,822
67111$0$140,859$35,225,705$171,010$171,010
68112$0$140,859$37,480,803$177,431$177,431
69113$0$140,859$39,871,063$184,093$184,093
70114$0$140,859$42,404,588$191,005$191,005
71115$0$140,859$45,089,970$198,176$198,176
72116$0$140,859$47,936,314$205,617$205,617
73117$0$140,859$50,953,272$213,337$213,337
74118$0$140,859$54,151,073$221,347$221,347
75119$0$140,859$57,540,563$229,657$229,657
76120$0$140,859$61,133,236$238,280$238,280
Understanding policy loans: At later ages, the accumulated value can be significantly higher than the net cash surrender value because outstanding loans and loan interest reduce the amount available upon surrender. For example, at age 120, the accumulated value is $61,133,236 while cash surrender value is $238,280. The accumulated value is not an independently withdrawable cash balance.
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IUL and Retirement Taxes

Retirement Income: What Matters Is How Much You Keep

Traditional pre-tax retirement accounts generally produce taxable distributions. Qualifying distributions from properly structured non-MEC life insurance policies may receive favorable federal income tax treatment.

Using the illustration's planned annual income of $140,859, explore how assumed effective tax rates of 28% or 34% affect the gross income needed from a fully taxable source.

Compare Hypothetical Retirement Income Taxes

Select an assumed effective tax rate:

Fully Taxable Retirement Income
$213,423

Approximate gross annual distribution needed to retain $140,859 after assumed taxes.

Qualifying Non-Taxable IUL Distributions
$140,859

Hypothetical comparison assuming the full illustrated distribution qualifies for non-taxable treatment.

These are hypothetical effective tax rates, not marginal tax brackets. The comparison illustrates tax arithmetic only, not equal contributions, product costs, investment performance, or total retirement outcomes. IUL distributions are not automatically tax-free.

Tax-Advantaged Retirement Planning

How Could IUL Fit Into a Retirement Strategy?

Tax-Deferred Accumulation

Interest credited within a qualifying life insurance policy generally is not subject to annual federal income tax while the policy remains in force.

Potential Tax-Advantaged Access

Non-MEC withdrawals may recover premium basis first, subject to exceptions. Policy loans generally are not immediately taxable while the qualifying policy remains in force.

Know the Risks

Loans accrue interest and may reduce policy values and death benefits. Policy lapse or surrender with outstanding loans can create taxable income.

Frequently Asked Questions

Questions About IUL Retirement Income

Is the illustrated retirement income guaranteed?

No. The planned annual amount is based on non-guaranteed assumptions. Any contractual lifetime income benefit depends on applicable rider provisions and eligibility requirements.

Can I contribute less than the example?

Potentially. Policy designs can vary based on financial goals, insurance needs, age, underwriting, and applicable funding limits.

Why does cash surrender value differ from accumulated value?

Outstanding policy loans and applicable deductions can reduce the net cash surrender value even when accumulated value continues to increase.

Are IUL retirement distributions tax-free?

Not automatically. Tax treatment depends on policy structure, MEC status, distribution method, outstanding loans, and applicable law.

Does the policy still have charges after premiums stop?

Yes. Insurance and other policy charges may continue even when planned premium payments stop. Additional premiums could be required to keep coverage in force.

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What Could Your Own IUL Retirement Strategy Look Like?

Your age, financial goals, planned contributions, health, and retirement timeline can make a significant difference. Explore your personalized options with PlanRight.

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Important Information: This illustration is hypothetical and uses non-guaranteed current illustrated assumptions. Actual results may be more or less favorable. Indexed Universal Life is permanent life insurance, not a direct investment in a market index. Premiums, charges, interest crediting, loans, withdrawals, and rider provisions affect policy results. Outstanding loans can reduce available cash value and death benefits and may result in taxable income upon lapse or surrender. Insurance and policy charges continue during years with no planned premium payments; additional premiums may be necessary. Tax comparisons assume qualifying non-taxable distributions and hypothetical effective tax rates. They are educational examples, not tax advice or guarantees of tax-free retirement income. The complete insurer-approved illustration, including guaranteed and alternative values, should be reviewed before making any purchasing decision. Consult appropriate financial, tax, and legal professionals.