Stocks are priced 30 percent lower than they were at their peak. Thus, equities are more attractive now than they were at the height of the bull market.
For tax-free stock market gains, invest through a variable universal life (VUL) insurance policy. With a VUL policy, you direct your premium payments among several subaccounts, including mutual fund clones.
If your subaccounts perform well, your cash value will swell. When you want to tap your cash value, first make tax-free withdrawals until you reach the amount of the money you’ve contributed. Then, take tax-free policy loans. By monitoring your cash value closely, you can avoid a policy lapse that will trigger all the deferred income tax.
What’s more, keeping your policy in force guarantees that there will be a substantial payout to your beneficiary after your death. As is the cash with most types of life insurance, VUL provides a death benefit in excess of the cash value–and no income taxes will be due. Thus, VUL can provide tax-free retirement income to you, as long as you tap the policy carefully, and an income tax-free death benefit to your loved ones.
