Retirement Planning

Retirement and Tax Benefits Associated With Variable Universal Life Insurance

While there are pros and cons for all different types of life insurance policies, many people find the tax-deferred growth on cash value and tax-free loans on these policies beneficial.

3 Benefits of Variable Universal Life Insurance for Retirement and Tax

For those who want the protection of a life insurance policy and don’t mind paying extra for the added benefit of potentially being able to earn cash-value growth on their premium dollars, the dual nature of a variable universal life (VUL) insurance policy may be a good choice. In many cases, a VUL can serve as a resource for retirement and tax planning with its earning potential and tax advantages.

Here are some of the retirement and tax advantages that come with variable

  1. Tax-deferred growth for retirement planning

    With a VUL, the returns earned on any cash-value are tax deferred until you withdraw them. Moreover, there are no minimum required distributions or MRDs (as with some other retirement savings accounts), so you can leave the money in your VUL to grow tax-deferred until you need it.

  2. 2. Tax-Free Policy Loans

    Any cash-value that you may have in your VUL can be taken out by way of a policy loan. That’s money you can borrow tax-free. However, any policy loans that are not repaid, can reduce your death benefit.

  3. 3. You don’t qualify for a Roth IRA

    Roth IRAs can be a great way to save for retirement. However, if you’re in a high-income tax bracket, you may not qualify for a Roth. The Internal Revenue Service has a set of rules to qualify individuals who can contribute to a Roth IRA. One set of rules pertains to income limits. If your income exceeds a certain amount, you will not be allowed to contribute to a Roth IRA. With a VUL, individuals in high-income brackets can allow their cash-value growth to build over time, similar to that of a Roth IRA. It should be noted that a VUL policy is more complex than many other forms of insurance and should be monitored closely throughout the life of the policy. Also, VUL is typically subject to surrender charges for a period of up to 15 years (more or less depending on the carrier) which can be very high in the early years of the policy.


For more information on life insurance and retirement planning, visit the Protective Learning Center.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit

Variable Universal Life Insurance

A variable universal life insurance policy can be a good way to get the life insurance you need, while providing cash-value growth for retirement and tax advantages. This article looks at three retirement and tax advantage benefits associated with a variable universal life insurance policy. Find out what variable universal life insurance benefits you can take advantage of today. For more information, visit our learning center.