An iul account can be a powerful tool for business owners preparing to sell.
Understanding what an iul account is and how it works gives you a strong foundation for making smart decisions about your wealth both before and after the sale.
In this first part we will walk through the fundamentals, explain why many sellers use iul accounts, and help you understand the strategic benefits.
Once you finish Part 1, make sure to continue with Part 2 where we explore how to apply the iul account directly to your exit strategy, your long term wealth, and your retirement planning.
What Is An IUL Account
An iul account is a type of permanent universal life insurance that includes a cash value component.
This cash value grows based on the performance of a market index such as the S&P 500.
However, the money in the account is not actually invested in the market. Instead, the insurance company credits interest to your cash value based on how the index performs.
The appeal for many business owners is simple.
The account offers the potential for higher returns when markets rise while offering protection from losses when markets fall.
This is because your credited interest cannot go below zero percent. That floor is one of the main reasons entrepreneurs use iul accounts as a protective wealth building tool after they exit their company.
Why Business Owners Preparing To Sell Consider An IUL Account
A business sale is often the single largest liquidity event in an owner’s life.
This moment brings both opportunity and responsibility.
You want growth, but you also want safety.
You want tax efficiency, but you also want access to your money when you need it.
This is exactly why many owners begin exploring an iul account as they prepare for their exit.
After selling your business you may suddenly hold a significant amount of cash.
Placing all of it into traditional investments can feel risky, especially during uncertain economic periods.
An iul account gives you a unique combination of potential growth linked to a market index and protection through a guaranteed zero percent floor.
Even if the index drops sharply, your credited interest cannot fall below zero.
The result is peace of mind during your transition into post sale life.
One of the most attractive features of an iul account is the tax deferred growth inside the policy.
You do not pay taxes each year on gains, which allows the cash value to compound more efficiently.
Later in life, you can access this cash value through policy loans that are structured to be tax free.
For many former owners this becomes a predictable and efficient income source during retirement.
It can also serve as a smart complement to investment accounts or real estate holdings.
Although an iul account is a long term tool, it offers access to cash value whenever needed.
Business owners appreciate this because life after a sale often includes new ventures, family opportunities, or unexpected expenses.
Instead of selling investments during a downturn or paying capital gains taxes, you can borrow from the policy at competitive rates and keep your external assets growing.
Because an iul account sits within universal life insurance, it naturally includes a tax free death benefit.
This helps you protect your family and secure long term generational wealth.
Many sellers like knowing that part of their exit proceeds not only grows safely but also guarantees a benefit to their loved ones no matter what.
When owners exit their companies during shifting economic cycles, a portion of safe allocation becomes crucial.
An iul account offers stability without forcing you into low yield instruments like certificates of deposit or treasury securities.
It allows you to keep part of your wealth in a structure that is secure yet still capable of producing meaningful credited interest over time.
Final Thoughts
Now that you understand what an iul account is and why so many business owners preparing for a sale consider it, you are ready to explore how it fits into your broader exit strategy.
Part 1 gives you the foundation you need.
Part 2 will show you how to apply this knowledge with confidence.
It covers advanced planning, long term benefits, common misunderstandings, and the most effective ways to use an iul account after your sale is complete.
If you are serious about making the most of your exit, you do not want to miss the next part.
