Can You Use an IUL to Buy a House?

Shawn Plummer

CEO, The Annuity Expert

You Can Use IUL Cash Value for a House Purchase

An Indexed Universal Life Insurance (IUL) policy accumulates cash value over time, which you can use for various financial needs. If your IUL policy has accumulated sufficient cash value, it can indeed be used as a down payment for a house or even to cover the entire purchase, depending on the amount available.

How Does it Work?

  • Cash Value Accumulation: Your IUL policy’s cash value grows based on a chosen equity index, like the S&P 500, with certain protections against market downturns.
  • Access to Cash Value: You can access this cash value through policy loans or withdrawals.
  • Using for Down Payment: When buying a house, you can withdraw or borrow against the cash value of your IUL for the down payment.

Key Considerations

  • Policy Loans: If you take a loan against your IUL, interest will be charged, but you don’t necessarily have to pay it back. However, unpaid loans and interest will reduce the death benefit.
  • Withdrawals: Withdrawals may be tax-free up to the amount of premiums you’ve paid. Exceeding this amount might incur taxes.
  • Impact on Policy: Both loans and withdrawals reduce the cash value and death benefit, potentially affecting the policy’s long-term value.


  • Scenario: You have an IUL with a cash value of $50,000.
  • Purpose: You want to use $30,000 for a house down payment.
  • Action: You can either withdraw $30,000 or take a loan against your policy.

IUL Cash Value Usage for House Purchase

ActionAmount UsedImpact on PolicyTax ImplicationsRepayment Required?
Withdrawal$30,000Reduces cash valueTax-free up to premiums paid; taxable beyondNo
Policy Loan$30,000Reduces cash value & death benefitNone if loan remains unpaidOptional


Using your IUL’s cash value for a house purchase is a viable option, provided the cash value is sufficient. This strategy offers flexibility but requires careful consideration of its impact on your policy’s value and benefits. Understanding these details ensures a more informed decision-making process.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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