In today’s insurance market there are many life insurance products for you to choose. From whole life policies to term life policies and the many different universal life policies, there is an option for everyone looking for life insurance coverage. In this article we are going to offer you a short overview of a specific type of universal life insurance policy known as an Indexed Universal Life policy, or IUL for short. Let’s take a closer look!
An IUL is a type of insurance policy that, like any other life insurance policy, offers a benefit in return for premiums paid. That is to say that in the unfortunate event of the policyholder’s passing their loved ones will receive a death benefit. Also similar to other life insurance policies, an IUL offers a cash value component which can accumulate interest. Beyond that an IUL possesses some unique aspects which set it apart from other life insurance policies.
You see, while IUL interest rates are linked to market indexes, none of your actual cash is invested directly into the stock market. This means that you avoid the major risks of investing and are shielded from cash value depreciation should the markets become increasingly volatile. While the market may increase or decrease the amount of interest you earn during an annual period, annual growth cannot depreciate in value later down the road.
Another unique aspect of IULs is the ease of access to and overall control you have over your funds. There are no early withdrawal fees or age restrictions. If you need money in an emergency you may withdraw from the cash value. If you do not pay this amount back, it simply decreased the cash value by the amount you withdrew.
One of the most appealing features of an IUL is the tax consequences or lack thereof. Because your contributions to the policy are made with post-tax income, your money grows tax-free. Furthermore, any distribution of the cash value is tax-free. Even when the time comes that the money is passed on to your loved ones, they too receive the distribution tax-free.
Now that you know a little bit more about Indexed Universal Life Insurance policies, you may want to discuss with your agent if this is right for you. Whether your goal is to obtain coverage while also accruing a bit of wealth or are seeking a conservative investment that also offers the traditional benefits of a life insurance policy, give us a call at (757) 819-6896. Your team here at Insurance Strategies – The Cooksey Agency are ready to help you explore your best options!