Tax-Free Income
The tax benefit is where an equity indexed universal life insurance policy really shines. When you want to begin withdrawing investment funds (generally around retirement age), the funds are taken out via policy loans tax-free (by IRS definition).
No Payback Required
The key to this agreement is that there is no penalty for not paying the loans back. EIUL holders generally take policy loans with no intention of paying the loan back. That being said, the death benefit decreases with every policy loan.
Provides Liquid Source of Income
An EIUL creates another ready source of cash that can be easily accessed during retirement with no tax implications.
