The Power Of An Index Universal Life Insurance Policy

By J. Jason Astwood, LUTCF, FSCP 

Introduction

Indexed universal life insurance is a type of permanent life insurance that provides financial protection for your loved ones. The benefits of an IUL include:

The benefits of an IUL include:

An IUL policy is a hybrid between whole life insurance and a mutual fund. The benefits of an IUL include:

• Flexibility. It can be used as either a guaranteed death benefit or as a cash value policy with living benefits.

• Tax-deferred growth potential. You’ll pay no taxes on the gains in your investment account, even if you withdraw money from it during retirement (subject to any required minimum distributions).

• Guaranteed death benefit — at least what you paid into the policy each year, so long as premiums are paid within 90 days of their due date. If not, your coverage may lapse and become payable upon the first day of incurring the obligation for which payment was missed (like paying for health insurance premiums).

Flexibility

Most universal life insurance policies have a guaranteed rate of return. This means that when you invest your money, the insurance company guarantees you a certain amount of return on their investment portfolio. However, with an indexed universal life policy, instead of receiving a fixed interest rate on your premium dollars, you get what is called "indexed growth." The growth in this type of policy is based off the performance of an index (such as the stock market), which will likely yield higher returns than other traditional investments like bonds or CDs.

However, there are some drawbacks to indexed universal life policies:

• They're usually much more expensive than fixed-rate UL plans because there's no limit

• There may be restrictions on changing investment vehicles (i.e., not able to switch from stocks to bonds without paying fees)

Tax-deferred growth potential

The policyholder can choose to invest in the policy in a variety of ways. They can choose a fixed or variable option, or they can choose to invest the money themselves. This gives them control over their investments and the potential for growth that comes with it.

It's important to note that many insurers charge high fees for this service, which will eat into your investment profits over time. But if you're comfortable managing your own funds and don't want to pay for someone else's services, then investing on your own may be right for you!

Guaranteed death benefit

Another benefit of this type of policy is that the death benefit is guaranteed. That means no matter what happens with the stock market, your family will always receive the death benefit you selected. The death benefit can be guaranteed for life, or it can be guaranteed for a period of time (such as 10 years). It can also be guaranteed for a certain number of years (such as 20 years).

Living benefit options

If you’re thinking of using your life insurance policy to make a gift, remember that the beneficiary may not be able to do what they want with their money. For example, a child may not want to use the funds for his or her education because he or she has other plans.

A child might also have other ideas about how the money should be spent. A parent might have had college in mind when setting up an IRA for a son or daughter, but if it wasn't clear that this was what was intended by setting up an IRA (and many people don't do anything formal), then it's easy for parents' expectations and wishes to get lost along the way as children grow up and become adults themselves.

Indexed universal life insurance is a type of permanent life insurance that provides financial protection for your loved ones.

IUL is a type of permanent life insurance that provides financial protection for your loved ones. With indexed universal life insurance, you can build up both a death benefit and cash value.

You purchase an IUL policy by paying a premium on an annual basis. In return, the insurer will guarantee to pay out your death benefit at some point in the future (which is often referred to as “annuity date”). If you choose to invest this premium within your IUL policy instead of pocketing it all at once, then it will act as a form of investment inside its own account where you can make changes as needed going forward.

Conclusion

There is a lot to consider when choosing the right type of life insurance. However, having worked with so many clients over the years and helping them make the right choice, I can tell you that Indexed Universal Life Insurance (IUL) is a great option for anyone looking for financial protection in their later years. It’s important to note that there are many different types of IUL policies out there so make sure you do your research before deciding on which one may be best suited for your needs. For more information you can contact us at www.astwoodins.com or call us at 801-224-0165.