3 Tax Advantages of Variable Universal Life Insurance

Variable universal life insurance is a type of life insurance that allows you to invest a portion of your premium into securities. This allows the life insurance policy to grow a cash value. This type of policy also has a few tax advantages. Here are some of the tax advantages that come with variable universal life insurance.

1. Tax-Deferred Growth

One of the big benefits of this type of policy is that it can grow tax deferred. You do not have to take money out of the cash value of the policy in order to pay your taxes every year. This makes it similar to a retirement account such as an IRA or a 401(k).

2. Helps Those in High Tax Brackets

If you are in a high tax bracket, you may not be able to get a Roth IRA. With variable universal life insurance, high income individuals can allow their investment dollars to accumulate just as with a Roth IRA. 

3. Tax-Free Policy Loans

Once you have a large cash balance, you can borrow against it with a policy loan. The money that you borrow can be taken without your paying any taxes on it. You can repay the money with flexible terms.

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