--- title: Which type of policy is best for a Life Insurance Retirement Plan (LIRP)? description: Indexed Universal Life (IUL) insurance can be used to accumulate retirement funds. An IUL policy may work best for a life insurance retirement plan. image: https://blog.advisors-resource.com/hubfs/Life-Insurance-Retirement-Plan-1.jpg --- [Skip to content](https://blog.advisors-resource.com/blog/life-insurance-retirement-plan-which-type-of-policy-is-best#main-content) ![advisors-resource-company-logo-horizontal-full-color-green-1](https://blog.advisors-resource.com/hs-fs/hubfs/advisors-resource-company-logo-horizontal-full-color-green-1.png?width=150&height=65&name=advisors-resource-company-logo-horizontal-full-color-green-1.png) - [Home](https://advisors-resource.com/) - [Who we Serve](https://advisors-resource.com/who-we-serve/) Show submenu for Who we Serve - [CPAs](https://advisors-resource.com/cpas/) - [Business Owners](https://advisors-resource.com/business-owners/) - [Financial Professionals](https://advisors-resource.com/financial-professionals/) - [Webinars & Blogs](https://advisors-resource.com/webinars-case-studies/) Show submenu for Webinars & Blogs - [Our Blog: Industry Insider](https://blog.advisors-resource.com/blog) - [Webinars](https://advisors-resource.com/webinars-case-studies/) - [Contact](https://advisors-resource.com/contact-us/) Open main navigation Close main navigation - [Home](https://advisors-resource.com/) - [Who we Serve](https://advisors-resource.com/who-we-serve/) Show submenu for Who we Serve - [CPAs](https://advisors-resource.com/cpas/) - [Business Owners](https://advisors-resource.com/business-owners/) - [Financial Professionals](https://advisors-resource.com/financial-professionals/) - [Webinars & Blogs](https://advisors-resource.com/webinars-case-studies/) Show submenu for Webinars & Blogs - [Our Blog: Industry Insider](https://blog.advisors-resource.com/blog) - [Webinars](https://advisors-resource.com/webinars-case-studies/) - [Contact](https://advisors-resource.com/contact-us/) Sep 21, 2022 8:38:20 AM # Which type of policy is best for a Life Insurance Retirement Plan (LIRP)? [Travis Pence](https://blog.advisors-resource.com/blog/author/travis-pence) Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://blog.advisors-resource.com/blog/life-insurance-retirement-plan-which-type-of-policy-is-best) [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://blog.advisors-resource.com/blog/life-insurance-retirement-plan-which-type-of-policy-is-best) [Twitter icon](https://twitter.com/intent/tweet?url=https://blog.advisors-resource.com/blog/life-insurance-retirement-plan-which-type-of-policy-is-best) [pinterest-p icon](http://pinterest.com/pin/create/link/?url=https://blog.advisors-resource.com/blog/life-insurance-retirement-plan-which-type-of-policy-is-best) [envelope icon](mailto:?body=https://blog.advisors-resource.com/blog/life-insurance-retirement-plan-which-type-of-policy-is-best) ### Planning for Retirement Most of your clients want to retire at some point in the future. When they choose to retire and how much money they need at retirement differs from person to person. It is important for them to start planning early to ensure they have the income they need to live the lifestyle they want when they are ready to retire. There are many ways to fund retirement, including: - Taxable Investments - Tax-Deferred Accumulation Vehicles - Qualified Plans - and Life Insurance ##### Taxable Investments Certain taxable investments such as brokerage accounts, private equity, rental property, royalties, or CD’s can provide liquidity for retirement income and other financial needs. These investments help to diversify your client's portfolio, yet income and capital gains taxes can reduce returns. ##### Tax-Deferred Accumulation Vehicles Annuities also help your client diversify their portfolio, while providing them with tax-deferred growth. Any withdrawals taken prior to age 59 ½ are generally subject to ordinary income taxes, plus a 10% federal tax penalty. All capital gains are converted to ordinary income at distribution. ##### Qualified Plans Qualified Pension Plans and IRAs are probably the most popular accumulation vehicles available today. They offer tax-deductible contributions and tax-deferred growth. However, there are drawbacks to qualified plans: - Income at retirement is fully taxable. - Early withdrawals may be subject to penalty. - Regulations limit how much you can contribute on an annual basis. - Distributions are required at a specified age. ##### Life Insurance Life insurance is commonly used to provide financial protection in the event of premature death. Your client can protect their spouse, children, their business, or other beneficiaries. Cash value life insurance can provide more than protection. It is a valuable planning tool as it accumulates tax-deferred providing income options to supplement retirement, or other needs and objectives such as legacy planning. This is otherwise known as a [Life Insurance Retirement Plan](https://lp.advisors-resource.com/lirp-infographic) #### Indexed Universal Life Insurance Indexed Universal Life Insurance (IUL) is a cash value life insurance policy. It provides the opportunity to increase the accumulation value within a policy without exposing your client's cash accumulation to downside risk. ##### Technically Speaking... An IUL policy offers multiple one-year Indexed Point-to-point strategies to determine the interest to be credited to your client's policy as well as a Fixed Account Option. Indexed strategies use the performance of a market, between specific time frames, to determine the interest rate applied to the policy. The interest rate applied may be subject to limitations, such as a cap or specified rate. A fixed account will earn interest at a rate periodically determined by the company. Interest is calculated using a compound method assuming a 365-day year and is credited at an annual effective interest rate. Any surrenders will reduce the amount of interest credit to your client's policy. ##### Hypothetically Speaking An Indexed Universal Life policy provides peace of mind during volatile markets. Your client can choose between several methods of having interest credited to their policy. Because indexed strategies are based upon the movement of an index, there may be concern about what happens in a year when the index decreases. Not to worry! Within the IUL no indexed strategy will be credited at a negative interest rate. This allows your client to take advantage of the potential increases in the index while maintaining a level of protection in the event the index drops below 0% (1). [![Want more details? Watch our LIRP Case Study](https://no-cache.hubspot.com/cta/default/6074374/e923e5b9-4f78-403a-b872-b1dd69931b4a.png)](https://cta-redirect.hubspot.com/cta/redirect/6074374/e923e5b9-4f78-403a-b872-b1dd69931b4a) Indexed Universal Life Insurance policy is not a registered security or stock market investment and does not directly participate in any stock or equity investment or index. When an individual purchases the policy, the individual is not buying an ownership interest in any stock or index. We do not make any recommendations regarding the selection of indexed strategies. We do not guarantee the performance of any indexed strategies. 1 You will never be credited a negative interest rate related to a change in the index. However, due to monthly deductions to your policy, your accumulation value has the potential to decrease regardless of the interest rate credited. ## Related posts [![indexed universal life insurance vs whole life](https://blog.advisors-resource.com/hs-fs/hubfs/indexed%20universal%20life%20insurance%20vs%20whole%20life.png?height=200&name=indexed%20universal%20life%20insurance%20vs%20whole%20life.png)](https://blog.advisors-resource.com/blog/iul-vs-wl) [Insurance](https://blog.advisors-resource.com/blog/tag/insurance), [Retirement](https://blog.advisors-resource.com/blog/tag/retirement), [Wealth](https://blog.advisors-resource.com/blog/tag/wealth) ## [Indexed Universal Life vs Whole Life Insurance](https://blog.advisors-resource.com/blog/iul-vs-wl) [Travis Pence](https://blog.advisors-resource.com/blog/author/travis-pence) Oct 16, 2018 9:12:20 AM [Read more](https://blog.advisors-resource.com/blog/iul-vs-wl) [![Life Insurance for Middle-Income Families](https://blog.advisors-resource.com/hs-fs/hubfs/Life-Insurance-for-Middle-Income-Families.jpg?height=200&name=Life-Insurance-for-Middle-Income-Families.jpg)](https://blog.advisors-resource.com/blog/life-insurance-for-middle-income-families) [Life Insurance](https://blog.advisors-resource.com/blog/tag/life-insurance), [Retirement](https://blog.advisors-resource.com/blog/tag/retirement), [Wealth](https://blog.advisors-resource.com/blog/tag/wealth), [pre-retirement](https://blog.advisors-resource.com/blog/tag/pre-retirement) ## [Life Insurance for Middle-Income Families](https://blog.advisors-resource.com/blog/life-insurance-for-middle-income-families) [Travis Pence](https://blog.advisors-resource.com/blog/author/travis-pence) Nov 19, 2021 12:30:00 PM Middle-income families in America say they recognize the importance of life insurance, yet many do... [Read more](https://blog.advisors-resource.com/blog/life-insurance-for-middle-income-families) [![](https://blog.advisors-resource.com/hs-fs/hubfs/AdobeStock_271171292.jpeg?height=200&name=AdobeStock_271171292.jpeg)](https://blog.advisors-resource.com/blog/demystifying-lirps-a-powerful-strategy-for-tax-free-retirement-income) [Retirement](https://blog.advisors-resource.com/blog/tag/retirement), [pre-retirement](https://blog.advisors-resource.com/blog/tag/pre-retirement) ## [Demystifying LIRPs: A Powerful Strategy for Tax-Free Retirement Income](https://blog.advisors-resource.com/blog/demystifying-lirps-a-powerful-strategy-for-tax-free-retirement-income) ![Picture of The Advisors Resource Team](https://blog.advisors-resource.com/hs-fs/hubfs/advisors-resource-company-profile-image-green-white.jpg?width=50&name=advisors-resource-company-profile-image-green-white.jpg) [The Advisors Resource Team](https://blog.advisors-resource.com/blog/author/the-advisors-resource-team) May 15, 2025 9:02:28 AM Life Insurance Retirement Plans (LIRPs) are gaining traction among high-income earners, business... 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