What Is Indexed Universal Life Insurance?
Indexed universal life insurance (IUL) is a whole life insurance policy that adds cash value through a stock market index such as the Standard & Poor’s (S&P) 500. The cash value can help lower your premium rate while maintaining the same death benefit. In many cases, insurees are able to achieve a net zero for their premium rate. This means they do not have a premium payment while still maintaining the same death benefit when they pass.
Benefits Of Indexed Universal Life Insurance
There are many benefits of indexed universal life insurance. When compared with a traditional whole-life policy, which may provide only a small interest rate that is not guaranteed, an IUL offers the potential for high cash value returns, a minimum interest rate guarantee, tax-free capital gains, and complete policy control and flexibility.
High Cash Value Returns
One of the major appeals of indexed universal life insurance is that it provides the potential for high cash value returns. The cash value is invested into stocks. Therefore, the cash value increases as the stock index increases over time. Historically, stocks usually rise significantly given enough time, although there may be some fluctuation along the way.
In addition, and perhaps even more importantly, most indexed universal life insurance policies offer a minimum interest rate guarantee. This means if the stock index performs poorly, then the policyholder is not at risk of great financial loss. This makes the IUL a safe asset overall.
Tax-Free Capital Gains
An indexed universal life insurance policy does not take capital gains when you withdraw from your cash value. This is because it is a whole-life policy (rather than term life). Other types of investments usually require capital gains taxes upon withdrawal.
Policy Control And Flexibility
Policyholders have full control over their indexed UIL policy. They can reduce their premium as desired, raise their death benefit over time and/or for a higher premium, withdraw from their cash value, and much more. Other assets typically do not have the same level of flexibility or tax benefit.
Who Should Consider Indexed Universal Life Insurance?
Indexed universal life insurance is right for anyone who wants to protect their wealth. Life insurance is a great asset that helps ensure financial security while you are alive and pays generously to your loved ones (or other beneficiaries) upon passing away.
Interested In A IUL Policy Or Want To Learn More?
At Vector Financial Group, we assist you with finding the right insurance carrier for your needs and goals, personalizing your policy, and much more. We are glad to answer your questions and help you make the tough decisions in regard to your life insurance needs and goals.