IUL vs a 401(k): The Difference

Both can help you build money for later. They work in very different ways. Here is a plain comparison.

What a 401(k) is

A retirement account invested in the market. It can grow well. It can also lose value in a downturn. Many employers add a match. You pay income tax when you withdraw.

What an IUL is

Permanent life insurance with a cash value linked to a market index. A floor limits index losses. It pays a death benefit. It has insurance costs and fees.

How to choose

If your employer matches, most people fund the 401(k) at least to the match first. An IUL may be considered for protection, a death benefit, and cash value access. Many people use both. Talk it through with a professional.