A Child Indexed Universal Life (IUL) policy works by linking the cash value of the insurance to the performance of a market index, like the S&P 500. This means the policy can grow in value based on market gains, with some policies even offering double-digit returns. Importantly, a Child IUL includes a guaranteed minimum floor, usually 0%, which protects your investment from losing value if the market drops.
The growth within a Child IUL is tax-deferred, so the cash value can increase without being taxed as it accumulates. This makes the policy a powerful tool for building wealth over time. Additionally, unlike traditional retirement accounts, a Child IUL allows for penalty-free
withdrawals at any age, providing flexible access to funds when needed. With no contribution limits, it also serves as an excellent option for additional tax-advantaged savings, even after maxing out other retirement accounts.