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Insurance Services

Variable Universal Life (VUL)

Life Insurance gives you an opportunity to grow your assets on a tax-deferred basis for your retirement and provides you with an income tax-free death benefit for your family if you should die prematurely.

Retirement Planning Alternatives

The first place you'd go for retirement savings is probably a qualified plan, including an IRA, 401(k), pension plan, defined benefit or defined contribution plan. If you have reached your allowable contribution level for your qualified plan, what are your options?

Let's say you have at least $10,000 additional income each year to invest

  • You can purchase an annuity. An annuity can provide you with tax-deferred accumulation. However, the death benefit of an annuity isn't income tax-free.
  • You could purchase life insurance. Like an annuity, life insurance provides tax-deferred accumulation. It also provides an income tax-free death benefit for your family. Unlike qualified pensions and retirement plans such as IRAs and 401(k)s, life insurance is not subject to funding requirements or penalties for late distributions. Life insurance, when structured properly, is one of the few vehicles that can offer you both tax favored benefits during your lifetime and an income tax-free death benefit at your death.

Supplemental Retirement Planning using life insurance is a non-qualified, tax advantaged way to use cash values for long term goals such as supplemental retirement income. Life insurance can be used as a retirement planning tool because you can withdraw or borrow money from it during retirement. But it also protects what you plan to accumulate during your life for your family — just in case you're not around to accumulate it.

Variable Universal Life

VUL is a unique financial tool because it provides investment options and choices during your lifetime and an income tax-free benefit for your family at your death. It also provides the following:

  • A variety of asset classes, with various portfolio managers.
  • Withdrawals or tax-free loans for retirement or education funding.
  • Flexibility to transfer your assets between different types of investments without a tax liability, and to change your premiums at any time.
  • An income tax-free death benefit for your family.

Variable life insurance values will fluctuate based on the underlying investments. Your account value, when redeemed, may be worth more or less than the premiums you paid. In addition, there are significant fees and charges associated with variable life policies. Depending on your risk tolerance and your time horizon, variable life could be a good solution. Fixed investment options are also available.

Cash When You Need It

Life insurance provides immediate liquidity (cash) at death. What if the policy holder dies in a time of poor markets? The specified death benefit is still paid out at death subject to policy terms and conditions. Other assets would not necessarily have to be liquidated to provide your family with the cash they'd need when you are gone.Life insurance also lets you take out tax advantaged withdrawals and loans. So, if you need the cash during your lifetime to help meet financial goals like college education or supplemental retirement income, you have access to income tax-free loans and withdrawals from your life insurance policy.

Citigroup, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the "promotion or marketing" of the transaction(s) or matters(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

Variable Insurance products, including variable annuities and variable life insurance, are offered by prospectus only. The prospectus contains the information about the product's features, risks, charges and expenses, and the investment objectives, risks and policies of the underlying portfolios, as well as other information about the underlying funding choices. Consider this information carefully before you invest. Product availability and features may vary by state. All product guarantees are based on the claims-paying ability of the issuing insurance company.

The amounts allocated to the variable investment options of your account balance are subject to market fluctuations so that, when withdrawn or annuitized it may be worth more or less than its original value.

Please note that any withdrawal or unpaid policy loan balance and interest will reduce your policy's death benefit and cash value. Interest on loans will be billed annually. If you do not pay the amount due, it will be added to the amount of the loan and next year's interest will be based on this new loan amount. You may make policy loan repayments at any time.

If your policy is a MEC (Modified Endowment Contract), you may subject to additional taxes and penalties on any distributions from your policy during the lifetime of the insured. Any distribution from a policy that is a MEC will be taxed on an "income-first" basis. Distributions for this purpose include a loan (including any increase in the loan amount to pay interest on an existing loan or an assignment or a pledge to secure a loan) or withdrawal. Any such distributions will be considered taxable income to you to the extent there is gain in the policy at the time of distribution. That is, the distribution will be includible in income up to the amount your account value exceeds your basis in the policy. A 10% penalty tax also will apply to the taxable portion of most pre-age 59 1/2 distributions from a policy that is a Modified Endowment Contract.

Insurance products are offered through SBHU Life Agency, Inc.

For more information, please contact your Financial Advisor.

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