Index Universal Life Insurance

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Introduction to Index Universal Life (IUL)

Index universal life insurance is a type of permanent life insurance with a cash value component in addition to a death benefit.

Introduction to Life Insurance

Life Insurance is a contract between an insurance policyholder and an insurer or assurer where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium upon the death of an insured person.

 

Major Types of Life Insurance

1. Term Life Insurance
2. Permanent Life Insurance

TERM LIFE INSURANCE

Term Life Insurance lasts for several years before it expires. Term Insurance is considered the simplest most accessible life insurance policy. Some of our most popular term products are Transamerica Term LB and Transamerica Term Trendsetter. Term Life Insurance Policies are more affordable than other types of life insurance policies and generally have lower premium costs.

PERMANENT LIFE POLICY

Permanent Life as name implies does not expire, it is for life. Most permanent life has a cash value component which is an investment-like, tax-deferred/tax-free savings account that is included in the policy. The cash value accrues interest with competitive rates. Each month, a guaranteed rate of return (the exact amount that goes into savings is determined by your individual policy). The policy’s cash value grows overtime and can be withdrawn when it accumulates enough values or is used for a loan.

Permanent Life is more expensive than Term.

COMMON LIFE INSURANCE TERMS EXPLAINED

 

TERM	DEFINITION
Death Benefit	The Amount Paid To Beneficiaries When A Policy Holder Dies.
Beneficiary	The Person(S) Who Are Selected By Policyholder To Receive The Death Benefit.
Premium	The Regular Payments Made Toward The Insurance Policy. These Are Typically Monthly.
Cash Value	A Tax-Deferred/Tax-Free Savings Account That Is Included In Permanent Life Insurance Policies.

 

 

Index Universal Life (Iul)

Index Universal Life is a type of a Permanent Life Insurance with a cash value component in addition to a death benefit. An index universal life insurance policy have a minimum guaranteed interest rate (so you won’t lose money). The floor (lowest ebb) and the cap (highest point) rate of return is determined by the insurer (insurance company).

Benefits Of IUL

1. 1. Cash accumulation
   2. There is protection against market loss.
   3. It has living benefits (critical, chronic, and terminal) and income replacement.
   4. Tax-free accumulation and withdrawals
   5. Protects the insured’s family.
   6. Estate protection
   7. Access cash value at any age
   8. Uninterrupted compounding rate of return
   9. Legacy transfer
   10. Probate avoidance
   11. Competitive rate of return, historically between 7 and 10 percentage
   12. It is the best IRS approved savings vehicle for tax-free retirement
   13. Cash value accumulated is protected from lawsuits (in most states)
   14. No minimum age or income requirement
   15. Gains made each year are locked in.
   16. It has rollover minutes, unlike the Roth IRA/401K