Higher taxes in the future
Tax-deferred cash value and potentially income-tax-free policy loans can add another option for retirement income. Policy structure, continued coverage, and tax rules matter.
A LIFE INSURANCE STRATEGY · WITH ENZO GIOVANNI
The5-Year
Retirement Plan™
Five years of planned funding.
A longer view of your financial future.
A strategy for affluent individuals and business owners who want to explore life insurance protection, cash value potential, and another source of retirement income.
A life insurance strategy, not an IRA, 401(k), or promise that you can retire in five years.
WATCH THE 4-MINUTE OVERVIEW
Educational overview. View sources and important information.
THE STRATEGY
A focused funding period.
More than one purpose.
The design brings together indexed universal life insurance and premium financing. The aim is to support protection and long-term cash value potential with a defined participant funding schedule.
PLANNED PARTICIPANT CONTRIBUTIONS
- Year01
- Year02
- Year03
- Year04
- Year05
Then, keep the plan under review.
The policy and any outstanding financing continue beyond the contribution period. Ongoing monitoring and an appropriate loan-exit plan matter.
Five planned contributions do not guarantee that no additional money will be needed. Actual obligations depend on policy performance, costs, lender terms, and the selected design.
THE 5-YEAR RETIREMENT PLAN™ · RISK & PROTECTION
Rise above uncertainty.
Plan for what matters.
Explore ways to address the risks that can disrupt your financial security and peace of mind.
A retirement savings gap
A focused funding design can complement your existing savings. Premium financing may support a larger policy, but adds borrowing costs and risks; it cannot guarantee a savings shortfall will be overcome.
Market losses & downturns
An index-crediting floor can protect against negative index interest credits. It does not protect all cash value: policy charges, loans, and withdrawals can still reduce it.
Preserving credited interest
Interest credited under the policy’s terms is not reversed simply because an index later falls. Policy costs and distributions still apply, and future interest credits are not guaranteed.
Untimely death
Life insurance can help protect loved ones from the financial impact of a death. Coverage depends on keeping the policy in force; outstanding loans can reduce the benefit.
Serious illness or injury
Available living-benefit riders may provide access to part of the death benefit after a qualifying condition. Eligibility and restrictions vary, and accelerated benefits reduce what remains.
QUALIFICATION & SUITABILITY
Is it a conversation
worth having?
The strategy is intended for financially established individuals and business owners. Strong income alone does not establish suitability.
Start with your circumstances.
- A real insurance need
- Family protection, a legacy objective, or a business purpose should be part of the discussion.
- Financial capacity
- Consider reliable cash flow, sufficient liquidity, existing commitments, and the ability to manage financing risks.
- Health and underwriting
- Insurance approval and pricing depend on the carrier’s underwriting. Lender approval is a separate consideration.
- A long-term perspective
- The five-year contribution design supports a longer-term insurance strategy. It is not a short-term savings account.
PREPARE FOR YOUR CONVERSATION
Which priorities sound like yours?
A discussion checklist, not a qualification test. Your selections stay on this page and are not submitted.
Bring your priorities to EnzoRISK & PROTECTION
Understand the protection.
Look closely at the tradeoffs.
Good planning considers both what a strategy can address and what could cause it to fall short.
The objective
The potential benefit
What to evaluate
Market uncertainty
An index-crediting floor can limit negative interest credits from a falling index.
A 0% floor is not a guarantee against losses in cash value. Policy charges, loan interest, withdrawals, and surrender charges can reduce value.
Future income taxes
Life insurance can offer tax-deferred accumulation and potentially income-tax-free policy loans.
Policy structure, MEC status, distributions, and continued coverage matter. A lapse or surrender with an outstanding loan can create taxable income.
Funding a larger policy
Premium financing may provide access to additional funding.
Interest rates, renewal terms, credit availability, collateral requirements, and loan repayment can change the economics.
Family or health events
Death benefits and available living-benefit riders can help address specified needs.
The contract defines coverage and eligibility. Accelerating benefits or taking loans generally reduces what remains for beneficiaries.
A useful question for your review
“What happens if credited interest is lower, borrowing costs are higher, or I need to exit earlier than planned?”
THE LONGER VIEW
Your outlook deserves
more than a single projection.
Explore potential income, protection, and legacy outcomes with the assumptions in view.
Compare guaranteed and illustrated values
A policy illustration is a planning tool. Non-guaranteed values are not forecasts or promises.
See the complete income picture
Review loan interest, policy charges, the remaining death benefit, and the effect of taking income over time.
Plan for the financing exit
Understand how the lender is expected to be repaid, the timing, and what alternatives exist if the original assumptions do not hold.
Review the policy over time
Actual results should guide decisions about funding, distributions, and maintaining coverage.
FOR BUSINESS OWNERS
The Talent Magnet.
A business-planning conversation.
Explore how an appropriately structured life insurance strategy could support the people and continuity of your business.
These are different arrangements, not automatic features of one policy. Tax deductibility, financing availability, and legal requirements vary by structure.
Discuss your business goals
YOUR GUIDE TO THE STRATEGY
Meet with Enzo Giovanni.
Licensed financial professional · Co-author of IUL ASAP and FIA ASAP
The 5-Year Retirement Plan concept appears in a bonus chapter of IUL ASAP. A personal conversation is the next step toward understanding how the design relates to your own goals.
Bring your questions about contributions, financing, protection, income, and the alternatives. The purpose of the review is to explore fit and help you make an informed decision.
Schedule a conversation with EnzoBEFORE WE MEET
A few important
questions.
You don’t need to know every detail before the call. These are useful places to start.
Does “five years” mean I can retire in five years?
No. It describes the planned participant contribution period for the strategy. Retirement timing and future income depend on your broader finances, the actual contracts, and performance over time.
Is this a qualified retirement plan?
No. It is a strategy using permanent cash value life insurance and premium financing. It is not an IRA, 401(k), or other tax-qualified retirement account.
Will I definitely stop making payments after five years?
The design calls for five planned annual participant contributions, but that is not an unconditional guarantee of no further funding. Policy costs, performance, and lender terms can result in additional obligations. Review the specific design and less favorable scenarios before committing.
Does a 0% floor protect all the money I put in?
No. The floor applies to the specified index-crediting calculation. Insurance charges, loan costs, withdrawals, and surrender charges can still reduce policy value. The strategy is not FDIC insured.
Are policy loans always tax-free?
No. Tax treatment depends on the policy, its continued status, and the transaction. Modified endowment contracts have different rules. Loans accrue interest and reduce available benefits; lapse or surrender with an outstanding loan can create taxable income. Review the details with your tax adviser.
What will we cover in the strategy review?
Your goals, insurance needs, funding capacity, time horizon, and questions. If the strategy warrants further consideration, the next step may include underwriting discussions and a personalized illustration. A meeting does not guarantee eligibility or obligate you to purchase.
YOUR NEXT STEP
Let’s put your goals
into the conversation.
Schedule a no-cost, 45-minute Zoom strategy review with Enzo Giovanni. Discuss your priorities, ask questions, and explore whether a personalized illustration makes sense.
Prefer a separate window? Open Enzo’s scheduling page. No purchase is required.
REFERENCE & CONTEXT
Sources and important information
Sources
The references below provide context for the educational overview. Links open in a new tab. References do not imply that the publishers endorse this strategy, website, or business.
Forbes discussion of cash-value life insurance and retirement income
David Rae, “5 Smart Ways To Get The Most Tax-Free Retirement Income,” Forbes, March 23, 2021.
This Forbes contributor article discusses cash-value life insurance as one of several potential sources of tax-advantaged retirement income. It is provided as general financial commentary and does not constitute an endorsement of the 5-Year Retirement Plan.
2021 life-insurance sales growth
LIMRA reported that total U.S. individual life-insurance new annualized premium grew 20% in 2021, representing the highest annual growth since 1983. Policy sales grew 5%, also representing the highest annual growth since 1983. LIMRA stated that its survey represented approximately 85% of the U.S. individual-life annualized premium market.
The comparison with 1983 concerns annual growth in these measures, not the absolute amount of life insurance purchased.
LIMRA, “2021 Annual U.S. Life Insurance Sales Growth Highest Since 1983,” March 16, 2022.
Indexed universal life share of 2021 premium
The same LIMRA study reported that indexed universal life new premium increased 21% in 2021 and represented approximately one quarter of U.S. individual-life premium reported through the survey.
Federal tax treatment of life-insurance proceeds and policy access
Under current federal tax law, life-insurance death benefits received by a beneficiary because of the insured’s death are generally excluded from gross income, subject to statutory exceptions. Policy loans from a properly structured non-modified-endowment-contract policy are generally not treated as taxable distributions while the policy remains in force. Loans accrue interest and reduce available cash value and death benefits. A modified endowment contract, policy lapse, surrender, unpaid loan or other policy event may cause part of the amount received to become taxable. Individual circumstances vary, and policy owners should consult a qualified tax professional.
Index crediting, floors and annual reset
Indexed universal life insurance does not invest directly in a market index. Interest may be credited based partly on the performance of an external index and is subject to the policy’s crediting method, participation rate, cap, spread and floor. A 0% floor means that negative index performance will not produce a negative indexed-interest credit for that crediting period. It does not prevent insurance costs, policy charges, loans or withdrawals from reducing cash value. Under an annual-reset design, indexed interest already credited is not subsequently reversed solely because the index later declines, although policy charges and other policy activity can still reduce total policy value.
- National Association of Insurance Commissioners, “Life Insurance”
- NAIC, “Life Insurance Illustrations”
- Mutual of Omaha, “How IUL Credits Interest”
- Allianz Life, “The Power of Annual Reset” (PDF)
General disclosure
Educational information and policy performance
Educational information only. This website and video provide a general introduction to a life-insurance strategy and are not an offer to issue insurance, a guarantee of policy performance, or individualized investment, legal, lending or tax advice. Life-insurance products contain costs and charges, and actual policy results depend on product selection, policy design, underwriting, premiums, crediting terms, loans, withdrawals and other individual circumstances. Non-guaranteed policy elements, including caps, participation rates, spreads, illustrated values and interest-crediting assumptions, may change.
The 5-Year Retirement Plan™ describes the strategic use of premium-financed permanent cash value life insurance. It is not a qualified retirement plan, bank deposit, or direct investment in an index. Insurance and lender underwriting apply. Policy, loan, trustee, and administration costs may apply. Actual cash value, death benefits, loan repayment, and income may be lower than illustrated.
Index-crediting floors
The 0% floor commonly associated with an indexed-interest account applies to the index-crediting calculation and does not mean that the policy’s cash value cannot decline. Insurance costs, expenses, rider charges, loans, loan interest and withdrawals may reduce cash value and death benefits and may cause a policy to lapse.
Policy loans and taxes
Policy loans are subject to interest and are secured by the policy’s value. Loans and withdrawals reduce available cash value and death benefits. A policy that lapses or is surrendered with an outstanding loan may create taxable income. Different tax rules apply to modified endowment contracts, and tax laws may change. Consult a qualified tax professional regarding individual circumstances.
Policy loans are separate from premium-financing loans. Any projected financing payoff or income stream depends on actual results. Business deductibility is not automatic.
Five-year funding period
References to five years describe the strategy’s intended period of personal funding in an appropriately designed case. They do not guarantee that a policy will be fully paid after five years or that no additional premiums, collateral or other funds will ever be required. Actual funding requirements depend on the issued policy, policy performance, financing terms and ongoing monitoring.
Planned participant contributions are typically annual. The five-year schedule does not establish that financing ends in five years.
Third-party financing
Any third-party financing is subject to lender approval, underwriting, loan terms, collateral requirements, interest-rate changes and renewal or refinancing risk. Financing is not free money, and the borrower remains responsible for the loan and related obligations. Additional collateral or personal funds may be required, and an appropriate exit strategy is essential.
Credit availability and repayment terms can change. Failure to satisfy required contributions or loan terms may require an early financing exit or policy surrender. Loan terms are not guaranteed for the entire strategy period.
Guarantees, eligibility and living benefits
Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Eligibility, product availability, riders and policy terms vary by carrier and state.
Coverage requires the policy to remain in force. Policies are not FDIC or NCUA insured and are not guaranteed by a government agency. Living benefits depend on rider terms and qualifying conditions. Accelerating benefits generally reduces remaining benefits, may have tax consequences, and may be restricted while financing is outstanding.