Indexed Universal Life is a pretty neat product. If it is sold correctly it can do some amazing things. It has strong guarantees available like Whole Life but has potential to have significant gains on the cash value side. It generally has a fairly low internal cost of insurance which allows much of the premium to go to work and build the cash value. If you are looking for the cheapest price to age 100, the Guaranteed Universal life may be a better fit, but if you are looking for a cash accumulation monster.
This could be your ticket. I’ve never like the concept of Variable Life much as it normally has no floor for protection and you can wake up one day and have no insurance if the side accounts do poorly. Indexed Universal life has as all fixed products, a minimum guarantee rate to protect the insurance and policy holder.
What are the common reasons for purchasing an Indexed Universal Life Insurance Policy?
- If you are looking for a policy that walks the tight line between savings / retirement cash build up and solid life insurance protection, this is a good alternative.
- This policy also does well as a guaranteed to 100 policy with a twist allowing for market potential without all the downside risk.
- These policies are for someone who wants double duty dollars. They would rather pay a little more to have a win-win scenario.
Who should buy Indexed Universal Life?
Because the policy has downside protection this policy could fit most life insurance needs. As long as you have reasonable expectations for the cash build up this policy could be a fit for you. It is a long term type of life insurance and should not be used in place of a properly purchased term plan, as there objectives are quite different. But you could do both depending on your needs.
Who should not buy Indexed Universal Life?
People with a relatively short need for insurance like 10-15 years should probably look at term. Also if you need a large amount of coverage, term insurance will be cheaper than Indexed Universal Life in almost all circumstances unless you are looking for coverage to age 90 or greater. People who have no desire for cash build up in there insurance. People on a tight budget should not buy this type of insurance.
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