5 ways IUL can help clients leave a legacy

Leaving a legacy is increasingly important to Americans.

Five years ago, the majority of Americans (62%) said they would rather spend down their entire retirement on themselves, with a minority (38%) preferring to leave a lot of money as a legacy.

Now that has flipped.

According to the 2026 Annual Retirement Study1 from the Allianz Center for the Future of Retirement®, most Americans (56%) would rather leave a lot of money as a legacy for their family or for causes they care about. Millennials, in particular, are interested in leaving a legacy – 65% would choose a legacy over spending money on themselves.

1

Indexed universal life (IUL) in a retirement strategy

To help achieve legacy goals, clients and their financial professionals may want to consider including indexed universal life insurance with a death benefit to complement their overall retirement strategies. Along with providing a financial legacy to loved ones through a death benefit, IUL can add flexibility to help strategies adapt when life doesn’t go to plan.
2

A tax-effecient way to pass on wealth

The death benefit of an IUL policy is generally paid income-tax-free to beneficiaries, providing a predictable and efficient transfer of wealth. This can help provide liquid assets for estate needs and offer a financial legacy.

3

Flexibility to use assets

Many clients may feel conflicted between choosing to use their assets for themselves in retirement and leaving something behind as a legacy.

Clients may be able to address both by using IUL to create flexibility in their retirement strategy. They have the ability to access their IUL policy’s cash value through loans and withdrawals.2 This can be used for supplemental income in retirement or other financial needs, such as to covering unexpected expenses and reducing pressure on other retirement assets, while retaining the potential to leave a death benefit behind. Clients should be aware that there is no guarantee a policy will earn sufficient interest to support a loan strategy; when using a loan strategy, policy values should be carefully monitored so as to not cause a policy lapse or unfavorable tax consequences.

4

Managing market risk

IUL’s accumulation potential is based on a fixed interest rate or the performance of an external index and includes a level of protection against market losses. This helps address market volatility risks that could erode the death benefit intended for beneficiaries, although certain fees and expenses will reduce policy values. Clients can find a balance between accumulation and protection, with the goal of more flexibility in their long-term strategy. This can help reduce the risk of having a legacy strategy derailed by negative market performance.

5

Adaptable strategies for evolving legacy goals

Flexibility matters in legacy planning to help clients stay on track for their goals. IUL can complement an estate planning strategy: its potential cash value can provide more options for distributing various assets in the client’s overall portfolio, and helping an overall financial strategy adapt to changing goals or life events.

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What else are Americans feeling about retirement

Our 2026 Annual Retirement Study has the details – and where financial professionals can provide support.

1 Allianz Center for the Future of Retirement® conducted the 2026 Annual Retirement Study in January 2026 with a nationally representative sample of 1,000 respondents age 25+ with an annual household income of $50K+/$75K+ (single/married) OR investable assets of $150K+.

The Allianz Center for the Future of Retirement® produces insights and research as a part of Allianz Life Insurance Company of North America.

2 Policy loans and withdrawals will reduce the available cash value and death benefit and may cause the policy to lapse, or affect guarantees against lapse. Withdrawals in excess of premiums paid will be subject to ordinary income tax. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. If a policy is a modified endowment contract (MEC), policy loans and withdrawals will be taxable as ordinary income to the extent there are earnings in the policy. If any of these features are exercised prior to age 59½ on a MEC, a 10% federal additional tax may be imposed. Tax laws are subject to change, and you should consult a tax professional.

Indexed universal life insurance (IUL) provides a death benefit that is generally paid income tax-free to beneficiaries, and the opportunity to build accumulation value.

IUL requires qualification through health and financial underwriting.

Allianz Life Insurance Company of North America (Allianz) does not provide financial planning services.

Guarantees are backed solely by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America.

Annuities and life insurance are issued by Allianz Life Insurance Company of North America, PO Box 59060, Minneapolis, MN 55459-0060.

For financial professional use only – not for use with the public.