Turning $500,000 Into a Lifetime Income Stream: The Power of an IUL

What if you could turn a single investment into a stream of income that lasts through retirement — while still keeping your money working for you the entire time?

That’s the strategy behind an Indexed Universal Life (IUL) policy. It’s one of the most flexible, tax-advantaged tools available for people who want long-term growth and lifetime income without the typical volatility or restrictions of traditional retirement accounts.

The Scenario: One Smart Move at Age 51

Let’s look at a real example.

• Starting point: A client, age 51, places a one-time premium of $500,000 into an IUL.

• Goal: Begin taking income at age 62 and continue until age 85.

• Assumptions:

  
  

  • 8% credited growth (S&P 500 indexed strategy)

  • 1% policy drag for internal costs

  • 5% loan rate during income phase

• 
  

The Results

By age 62, that single deposit has grown to about $1.05 million in accumulated cash value.

From there, the client can begin taking approximately $52,000 per year in tax-free income — from age 62 through 85.

That’s $1.21 million in total income, while still leaving over $2.1 million in policy value at age 85.

Why This Works

An IUL allows your cash value to grow based on an index like the S&P 500, without direct exposure to market losses. During the income phase, you can access the funds through policy loans, which are tax-free when managed correctly.

It’s not about “playing the market.” It’s about using insurance as a financial vehicle — one that combines growth potential, tax advantages, and flexibility in a way traditional retirement plans can’t always match.