Indexed universal life insurance
What is indexed universal life insurance?
Indexed universal life insurance is more affordable than whole life insurance and can offer cash value growth, along with features that can give you flexibility as your needs change over the years.
What does indexed universal life insurance offer?
In addition to lifetime protection, indexed universal life insurance offers a unique combination of benefits to help meet your needs, including:
A portion of your premium payment goes toward the insurance, which includes any fees and death benefit coverage.
The remainder of your premium payment adds to the policy’s cash value, which you can withdraw or borrow against.
Who may benefit from indexed universal life insurance?
Indexed universal life insurance is designed for people who are looking for:
- Protection for your family in case of your premature death
- Potential cash-value growth with tax advantages to use for things such as supplemental retirement income
- Built-in flexibility, in case something happens and you need to adjust your premium or death benefit value
- Options for covering long-term care expenses
- A way to transfer wealth to future generations in a tax-efficient manner
A life insurance death benefit is the tax-free payout to the beneficiary or beneficiaries, offering financial support when the insured person passes away.
Whole life insurance offers 3 important tax advantages that can be useful additions to a comprehensive financial strategy:
- A tax-free death benefit: The death benefit paid to beneficiaries is typically not subject to income tax.
- Tax-deferred cash value growth: Any cash value within a permanent life insurance policy can grow on a tax-deferred basis until a withdrawal is made.
- Tax-free policy loans: Policyholders can borrow against the cash value of their life insurance policy without facing immediate tax implications.
With indexed life insurance, your money is never actually invested in the market. You’re protected with a guaranteed minimum interest rate in the fixed account and a guaranteed minimum floor rate in the indexed interest strategies.
Yes, it is possible to outlive an indexed universal life insurance policy. If the policyholder lives beyond the policy maturity age, which varies by insurer, they will receive the entire cash value of their account and the policy will end. There are also some products that offer extended death benefit protection for an additional cost.
Term life insurance covers you for a set length of time, or term, typically 10 to 30 years. If you pass away during that period, the insurance company pays a death benefit in the amount you choose.
Indexed universal life insurance is intended to last a person’s lifetime. The premium is generally higher than term life insurance because it not only funds the tax-free death benefit, but a cash value account. In addition to the death benefit, the policy’s cash value grows over time and can be used for a number of purposes, including low-interest loans, while the policyholder is alive.