Indexed universal life (IUL)

Indexed universal life insurance (also known as IUL) is a type of life insurance policy that provides a death benefit to a policy holder’s beneficiaries, as well as a savings component that accumulates cash value over time. Unlike traditional universal life policies, indexed universal life insurance allows policy holders to allocate a portion of their premiums to different investment indexes, such as the S&P 500. The cash value of the policy then has the potential to grow based on the performance of those indexes. This unique feature offers policyholders the opportunity to participate in the market gains while also providing a certain level of protection from market downturns. This makes IUL appealing for individuals who need the protection of a death benefit in the event of a sudden loss and also seek a potential growth in their policy’s cash value. Additionally, many IUL policies allow the policy holder to borrow against the cash value of the policy,  providing a source of tax free income that can be useful during a time of financial need or for retirement planning.

   To prevent your premium from increasing over time in an indexed universal life policy, there are a few key strategies to keep in mind. Firstly, it is important to review and understand the policy’s terms and conditions before signing up. This includes knowing the cost structure such as the the surrender fees or any charges associated with loans against the cash value. Secondly, it is important to consider making regular premium payments on time to maintain the the policy’s cash value and prevent any lapses in coverage. Thirdly, if you need to skip payments on your life insurance policy, or borrow against your policy, make sure you contact the insurance company that holds your policy so that they can run illustrations and make sure your premium will stay same. For any concerns, it is a good idea to contact your insurance company to discuss any financial changes or changes in strategy to ensure your premium and cash values continue to perform and meet reasonable expectations.

   An IUL policy can have many benefits when planning for your financial future. The ability to grow your cash value while still providing a death benefit can open the doors to many strategies for increasing financial security and diversifying your assets. Speaking to a professional can help answer any questions you may have and help you determine if an IUL policy is right for you.