Things You Didn'T Know About Indexed Universal Life Insurance
An indexed universal life insurance policy (IUL) is an attractive choice for many people because it offers more than traditional whole-life or term policies. It combines the flexibility of a universal life policy with the potential for a greater return on investment through index-linked accounts.
Here are three unique aspects of an IUL policy that you may not know about.
One of the unique aspects of an IUL policy is that you can adjust your premium payments as needed. This allows you to respond to changes in your financial situation without making large up-front payments.
For instance, if you experience a temporary financial hardship, you can adjust your premiums to match your current means. Likewise, if you have extra money available, you can increase your premiums and take advantage of bonus interest rates offered by some insurers. The bonus rate is typically a percentage of the amount you contributed over the course of the year.
Cash Value Growth
Another benefit of IUL policies is their growth potential. As part of the contract, your insurer will credit you with a certain amount of interest, depending on the performance of an underlying stock market index. In other words, your cash value can grow based on the performance of the index.
As such, your policy can benefit from the stock market's long-term growth while also being protected against losses. This is because most IUL policies have a "cap rate," which limits the amount of fluctuation in your cash value. This makes them an excellent option for those seeking potential cash value growth without the risk of investing directly in stocks or bonds.
Death Benefit Protection
The death benefit provided by an IUL policy is generally higher than what you would receive with a term life insurance policy due to its increased cash value accumulation potential over time. This means that your beneficiaries will receive more money upon your death if the policy has been adequately funded and managed throughout its lifetime.
The death benefit also provides peace of mind knowing that no matter what happens during your lifetime, your family will still have access to those funds when needed most. Plus, the death benefits are tax-free, which means your beneficiaries won't be required to pay taxes on the money they receive. Most policies also do not have a designated expiration date, so the death benefit will remain in force until it is needed.
As you can see, indexed universal life insurance (IUL) offers several unique benefits compared to traditional whole-life or term policies. If these features sound appealing to you, then an indexed universal life insurance policy might be worth considering for your financial security needs.