Surf the Wealth Wave: IULs, Whole Life, & Cash Value
If you’re in your 20s or 30s, planning for retirement might feel like packing a winter coat for a beach trip. But trust us — if you want to sip mai tais on the beach during retirement rather than scrape by while being a door greeter at your local Wally World, you’ll want to start building your financial portfolio now.
One powerful, often overlooked wealth-building tool is the Cash Value in Whole and Indexed Universal (IUL) life insurance.
Indexed Universal Life (IUL) and Whole Life Insurance aren’t just about leaving money behind when you’re gone. They’re about creating flexible, tax-advantaged cash flow while you’re still here. Let’s break it down.🌺
🏄♂️ The Basics: What's This All About?
Both IUL and Whole Life insurance are types of permanent life insurance, meaning they never expire if properly funded. But the real magic happens in the cash value, which grows over time and can be accessed while you're still alive.
Think of your policy like a coconut tree:
The trunk is the death benefit.
The coconuts are your cash value.
And you can crack open those coconuts for sweet financial hydration, in the form of policy loans or withdrawals.
🌞 Option 1: The IUL (Indexed Universal Life)
An IUL lets your cash value grow based on the performance of an index like the S&P 500 (with floors to protect you from downturns). You’re not directly in the market — you catch the good waves but are safely weathering the storm (market drops) from inside, smiling as you thank the good Lord that you didn’t directly invest in the stock market so your money is still safe and likely growing- albeit a lower interest rate than when the market does well, but still growing (if set up correctly) while everyone else is still trying to weather the storm.
❤️Why People Love It:
Upside potential with downside protection (floors).
Tax-free loans for retirement income. Your annual retirement income depletes your death benefit (not completely- you’ll still have plenty to cover end of life- they adjust your retirement income accordingly). This allows your cash value to continue growing and compounding and still accessible and will go to your beneficiaries upon your death, along with remaining death benefits.
Super flexible: you can adjust premiums and death benefits.
🐢 Option 2: Whole Life Insurance
Whole life is the steady cruiser. The cash value grows based on guaranteed interest and dividends (if with a mutual insurer). Think turtle power — slow, predictable, and built to last.
❤️ Why People Love It:
Guaranteed growth no matter what the market does (when set up correctly).
Perfect for banking strategies (hello, infinite banking).
Stronger for people who like fixed routines and guaranteed results.
🧉 The Big Question: Can You Use That Money Before You Die?
Yes, and it can be tax-free.
Both IULs and Whole Life policies let you take out policy loans backed by your cash value.
So, what’s a loan from your policy?
You're borrowing from the insurance company, not your own money, but you don’t “qualify” for the loan- you just ask the carrier to issue a loan- you should receive all terms upon request of the loan, so you understand fees, rates. etc- note that there won’t be a set repayment time- you do it when you can or not, and it goes against your death benefit in the end.
Your cash value stays in the policy, ideally still earning interest or dividends.
You pay interest on the loan, or let it accrue- your choice, again, if it’s not repaid, then your death benefit will be adjusted accordingly.
If managed right, it won’t impact your lifestyle or retirement income.
You can also make withdrawals, which are permanent and reduce the policy’s value and future growth. These are tax-free up to the amount you've paid in (called your basis).
🌊 Which One Should You Choose?
Here’s a vibe check:
If you want flexibility and market-linked growth, then ride with IUL.
If you want steady, predictable growth, then ride with Whole Life.
If you want to leverage your money like a bank, then ride with either, but Whole Life is often best.
If you want to protect cash flow long term, then ride with either — it just needs smart design.
💸 But How Do You Avoid Screwing It Up?
Letting loans grow without a plan = policy collapse + tax bomb.
Here's how you avoid that:
Pay loan interest annually, or let the policy growth offset it.
Only borrow what your policy can handle based on current performance.
Use outside income to pay down loans if needed.
Don’t set it and forget it — review your policy every year, like you check your surf forecast.
🌺 Final Thoughts: Grow Your Money Island-Style
Starting young gives you more time, more growth, and more options. Whether you go with IUL, Whole Life, or a combo, these policies aren’t just insurance — they’re lifestyle tools. Like planting a palm tree today so you can hammock under it tomorrow.
If you're serious about building a tax-free retirement income stream, or even just want to be your own bank someday, this is your wave.
Ready to ride it? Let’s talk. We’ll help you set it up, island style. 🏝️
