What Is An IUL?
Index Universal Life Insurance?
The index universal life (IUL) insurance policy, offers death benefits. However, IULs not only provide death benefits but several additional benefits:
- Protecting financial assets
- Flexible options
- Access to the cash value of the insurance policy
Index Universal Life Insurance is Available in Several Forms
There are several types of universal life insurance. Inflation-adjusted fixed-rate insurance is one example. Another type is the variable rate, which invests in the stock market, so it comes with larger risk.
In comparison to other universal life insurance policies, index universal life insurance has some advantages. IUL policies have a higher growth potential than universal life insurance policies. This may be an attractive option for those seeking flexible coverage. With IULs you may be able to achieve some of the upside potentials of the stock market but without any of the downside risks. The reason for this is that in an IUL, the principal* is guaranteed, whereas the interest rate is determined by market conditions. The combination of these two factors is therefore advantageous. We can help you explore your options at Retirement Planners of Texas, based on your needs.
How IUL Policies Work
The premium covers a portion of the cost based on how long an insured person lives. The remaining portion is added to the cash value. While IUL policies don’t directly invest in the stock market, your money may earn interest according to an index. This interest is credited when the index goes up. You can also choose more than one index rather than just one in some policies. This gives you more flexibility in choosing your IUL.
You can allocate your money in several ways. There are some policies with fixed interest rates and others that fluctuate based on a specific index. You can earn interest in cash as well. If you decide to contribute to another index, the third part of your money will also earn interest.