Indexed Universal Life
A Index universal life insurance policy is a form of permanent life insurance that provides the policyholder with protection and a savings element, also known as a cash value. An indexed universal life (IUL) insurance policy allows the policyholder to decide on how much cash value can go towards an equity-indexed account or a fixed account. Common indexes include the SP 500 or NASDAQ-100 and other index options that allow you customized a plan that's right for you.
You don't invest directly in an index even if the index goes down your credited interest rate in never less of guaranteed.
Now, this may sound confusing to some, but fortunately, we are is here to make sure you have a complete understanding of your life insurance options! So, before we get into the benefits of an IUL, let’s take a look at how these policies actually work.
How Do IUL’s Work?
When you pay your premiums for this policy, a part of it will go towards your policy while the rest will be added to your cash value. This cash value will be credited with interest that is based on an equity index.
Many policies will allow their policyholders to choose multiple indexes. IULs will give the policyholder a selection of indexes to choose from, as well as provide a guaranteed minimum fixed interest rate.
What Makes IUL’s Great?
One of the biggest advantages of owning Index Universal Life is the ability to build cash value that you can access when you need it. Every policy owner has the right to borrow money from the insurance company by using his or her policy cash surrender value as collateral for the loan, there is no condition on being able to borrow money from the insurance company.
The primary reason you purchased life insurance is for the death benefit protection, but it can also be used to protect you, your family and your business while you are living.
One of the best benefits of an Index Universal Life is the fact that cash will grow tax-deferred, an income tax-free benefit5 to your beneficiaries plus access to cash values during your lifetime . Not only this, but the cash value of the policy can be used to pay the premiums of the policy, and you have the flexibility of adjusting the death benefit.
Other great benefits of an IUL include:
- Low premiums
- Less risky because the policy won’t be directly invested into the stock market
- Cash value can be accessed at any time.
Income for Life
The fear of outliving retirement income has become a very realistic concern for many Americans who are facing retirement. Retirement is about more than what you save. It’s also important to make your income last a lifetime.Can help you turn your policy's cash value into retirement income that you can never outlive.
Overall, an IUL is a great savings vehicle, especially when it comes to savings and avoiding taxes during your retirement.