Indexed Universal Life Insurance (IUL)

What is Indexed Universal Life Insurance (IUL)?

  • IUL is a type of permanent life insurance that lasts your entire life and builds cash value.

  • Unlike other universal life policies, IUL places the cash value in sub-accounts that mirror stock indexes (e.g., S&P 500).

  • It also offers fixed account options with a set interest rate.

How IUL Works:

  • Premium Payment: Pay a premium for lifelong coverage.

  • Cash Value: Build cash value over time.

  • Investment Component: Cash value tied to stock or bond index performance.

  • Flexibility: Adjust premiums and death benefit as needed.

Pros of IUL:

  • Market-Linked Growth: Potential for higher returns due to index performance.

  • Flexibility: Adjustments to premiums and benefits.

  • Tax-Advantaged: Cash value grows tax-deferred.

Cons of IUL:

  • Complexity: IUL policies are intricate.

  • Ups and Downs: Market volatility affects returns.

  • Costs: Fees and charges associated with IUL.

Remember, IUL is ideal for savvy investors seeking flexibility. If you prioritize guarantees, consider a whole life policy instead.