IUL Retirement Planning and Estate Benefits with QNUPS

IUL Retirement and Estate Planning with a QNUPS Solution

Client Background
Jeff, a 50-year-old high-net-worth individual domiciled and resident in the United Kingdom, sought a comprehensive retirement planning strategy to safeguard his estate and ensure future income for his family. Married to Cath, with two children, Jeff has built a substantial property portfolio and other assets. He wanted to ensure his estate would remain protected from UK inheritance tax while also securing a reliable retirement income through Index Universal Life Insurance (IUL).

Using Pension for Life, a bespoke QNUPS and IUL United Kingdom solution, Jeff aimed to generate a lifetime income starting at age 60, while maintaining his estate’s value and protecting his family’s future without immediately transferring his assets to his young children.

Estate Planning Strategy

Jeff’s property and other assets were valued at $56,000,000 and generated $150,000 monthly. However, this substantial estate would lead to significant UK inheritance tax liabilities. Jeff and his advisers sought a retirement and estate planning solution that would protect this wealth while providing his family with liquidity to cover estate taxes.

Two options for life insurance were considered:

1. A UK-based IUL policy with a death benefit of $31,000,000 at a cost of $349,041 annually. If Jeff lived for 30 more years, the total cost would be $10,471,230, representing 33.8% of the total payout.
2. Alternatively, Pension for Life, an international life insurance product with a single $9,000,000 premium held within a QNUPS, would provide a $31,000,000 death benefit. This option saved Jeff $3,600,000 in immediate tax liabilities, and all future policy growth, including the death benefit, would remain outside his estate, saving an additional 40% on future taxes.

The second option was chosen, combining both estate liquidity and future income benefits through Pension for Life.

Investment Strategy

Jeff invested $9,000,000 into a cash value index universal life policy, linked to the S&P 500 index, under Pension for Life. This investment aligned with his goal of generating future retirement income while ensuring substantial liquidity for his estate upon his passing. The policy offered significant benefits:

• 100% participation in S&P 500 market gains, with protection from market downturns.
• Guaranteed cash surrender value, ensuring the policy retained value throughout Jeff’s lifetime.
• Tax-free growth and death benefit, further enhancing the tax efficiency of the strategy.
• The use of an IUL retirement account ensured that Jeff could enjoy the benefits of market-linked growth without risking losses due to market declines.

Retirement Income Benefits with Pension for Life

Starting at age 60, Jeff's Pension for Life policy will provide him with an annual income of $360,000, drawn from the policy's cash value. This income will supplement his other retirement assets and maintain his standard of living, all while preserving his estate for future generations. The index universal life insurance policy not only provides guaranteed income but also ensures tax-free growth within a QNUPS, making it an ideal solution for Jeff's IUL retirement needs.

Summary of Key Benefits of Pension for Life

• International Life Policy within QNUPS: Jeff's initial $9,000,000 investment remains outside his estate, saving $3,600,000 in immediate UK inheritance tax liabilities. All future growth also remains outside the estate, preserving wealth for his heirs.
• Guaranteed Death Benefit: His family will receive a guaranteed $31,000,000 payout, which can be used to cover estate taxes or other needs.
• IUL Retirement Income: Starting at age 60, Jeff will receive $360,000 annually, ensuring financial security during retirement. His IUL retirement account will provide long-term income with no risk of loss from market downturns.
• Tax Efficiency: The policy's growth and payouts are shielded from UK inheritance tax, providing substantial long-term savings, making Pension for Life an ideal solution for retirement and estate planning.

Conclusion

The Pension for Life strategy offered Jeff the flexibility to secure both his family’s future and his own retirement in a tax-efficient manner. By investing in an international index universal life insurance policy through a QNUPS provider, Jeff not only mitigated his inheritance tax liabilities but also secured a guaranteed income for life. The strategy seamlessly integrated both retirement planning and estate planning benefits, offering a bespoke solution for high-net-worth individuals seeking to protect and grow their wealth.

Jeff’s choice of Pension for Life provided him with the best of both worlds: income during retirement and a secure legacy for his family, all within the structure of an IUL retirement account and the tax advantages of a QNUPS.

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Secure your future with bespoke retirement and estate planning tailored to your unique needs. Capital for Life’s expert team are specialists in high-net-worth life insurance solutions incorporating high value life insurance and pension planning, ensuring your wealth is protected and passed on tax-efficiently. Contact us today to craft a personalised Pension for Life strategy that secures both your financial future and your family’s legacy.