Indexed Universal Life

Index Universal Life (IUL) insurance is a universal life plan where the cash accumulation is tied to the success of a financial index, such as the S&P. Most other Universal Life plan accumulations are, however, tied to the success of the insurance company’s investment portfolio and how much the company will pass through to their policies holders each year when they declare the policy interest rate.

Using an Index UL, allows the policy holder to benefit as the financial index goes up but avoids losses if the financial markets go down. Most companies offer a minimum return, such as “0%” or “1%” – even if the index returns goes below these numbers.

This is an excellent life insurance plan for long term (minimum 10 to 15 years) cash accumulation for college education or retirement. Over funding, up to MEC levels, allows a person to maximize the benefits as the market goes up, not take losses on the principle if the market goes down, accumulate potentially tax free cash values for a financial goal and generally provide a tax free death benefit if the person dies prior to completing their cash accumulation goals.

One of the keys for success in using this policy is to set reasonable expectations in running the illustrations. If you run the maximum percentage allowed by the company, we would suggest you also show the client at 7% and 5% returns for the indexes used.

Like the Current Assumption UL plan, many Index UL plans can also be structured with long term guarantee death benefits and at the same time accumulate cash values.

If you want an illustration for an Index UL plan, we suggest you use the Permanent UL Request that is part of this website. Please fill free to call Fred or Casey at (760) 435-9702, if you have any questions on these products or which company to use.