IUL Vs Annuity

All right, so IUL versus annuity, which one do I want, right? What's better? Is one better than the other? Let's start to talk about some of the differences, some of the similarities, and which one will work for you. I'm Eddie Gartner with Epic Financial Strategies, and we're gonna talk about this today. IUL versus annuity, which one is the right one for you? Really, where am I putting my money that it's the safest, working the best for me? What are the differences between the two products? Well, let's start with what's similar, and it's really that they're both issued by a life insurance company, but from there, they're vastly different. So let's start with some of the differences here. If we first look at an IUL, one of the main reasons or one of the biggest reasons people get life insurance is for what? It's for the death benefit, right? An IUL is going to have a death benefit, and it's gonna be a multiple of the dollars that you put into there. Until you reach a certain age, age of maturity, most of these policies are designed so that the cash value and the death benefit aren't equal until you're 100 years old. So when we're looking at this death benefit here, we know we're gonna get a multiplier effect on our dollars as they go into that policy. On an annuity, I may or may not have a death benefit rider that's attached to it, and usually, the death benefit is going to be equal to the contract value. Next, let's look at cash value accumulation, right? If I have cash value in a life insurance policy, I'm gonna be adding to this policy every month, every year, right? I'm going to have this policy so that part of my premium buys this death benefit, and the other part of the premium goes to the cash value. The idea is I wanna grow this policy, and I want it to be able to be there and accessible for me when I need it. So on the annuity side of things, the cash value is really gonna be the contract value. Now, again, I might be putting into this on a consistent monthly basis. I might be adding to it year over year as an IRA contribution or a Roth IRA contribution, but my contract value is going to be basically what the dollars are that I put in right away. So the annuity typically will have quicker accumulation of dollars because none of that premium is really being used to buy that death benefit. Now, on the growth of the cash value in your IUL, this is going to be based on whatever index you're in. It's going to be based on the index, and you're gonna get credited as such, right? So if the index performs well, and you have a cap rate of, say, 7%, and the market did eight or nine or 10, well, you got 7% growth in your policy, right, on that cash value. If the market does poorly and it loses 10 or 15%, well, you're probably gonna have a floor of 0%, which means your cash value is not gonna grow. You're not gonna get any interest credited to it, but you're also not gonna lose any dollars out of that cash value. On the annuity side here, the growth can be many different things, right? Because we've talked about this in other videos, there's so many different types of annuities. I might have a variable annuity, which my growth is then tied to the stock market, and I get to participate in the upside, but I also get to participate in the downside. I could be in an indexed annuity, which might function a lot closer to an IUL, right? Or I could be in a fixed annuity, which is giving me a guaranteed interest rate dependent on where interest rates are at the time you purchase it. So if you're somebody that's in the accumulation phase, let's say you're in your early 20s, 30s, even 40s, and you're wanting to grow your cash value, you're wanting to create another bucket of money that's maybe not tied to stock market fluctuations, the IUL might be the right choice for you because maybe you have a need for the death benefit, but you also want all those living benefits that come along with that type of policy. However, if you're older in age, maybe you're in your later 50s, early 60s, and you're really planning for retirement, well, an annuity might be a better choice for you. If you're sitting there thinking, hey, you know what? IUL maybe sounds like what I'm looking for, or annuities kind of sound more of the road that I wanna go down, we've actually created a lot of videos on both of those. If you go into the description below, you'll find two links. One will bring you to our playlist on annuities. The other will bring you to the playlist on life insurance. And if you like this content and you wanna see more of it, go ahead and hit that subscribe button.