What can IULs offer?
Indexed universal life insurance policies can be a permanent life insurance cover provided that you maintain regular payment on premiums and avoiding a lapse by staying within your withdrawal limit. In the event that you pass away while your coverage is still active under these terms, your beneficiaries will be eligible to receive a tax-free death benefit. Regular premium payments will increase the cash value of your policy, which could provide a tax-free source of funding.
IULs are secure and will protect your retirement investment from potential losses. They are designed as a conservative asset, with a portion of your policy indexed to the stock market. While the potential gains are capped, you are also protected from any losses on your principle or cash value. The protected nature of these policies allow for a safe alternative to bonds and savings accounts. They also offer better value in terms of returns. For instance, the money market returns rank between 1% and 3%, while IULs have enjoyed up to 7% returns even when the stock market has underperformed. IULs generally have better flexibility and liquidity than money market options.
Is an IUL ideal for you?
Some people may not qualify for life insurance because of health reasons. Others may not have any dependents, or a tax problem, both of which may be addressed by this type of policy. It may not be an ideal option for you if you fall under these categories. You do need to speak to a financial adviser to understand whether an IUL could be ideal for you.