Index Universal Life Insurance
Flexible Premiums. Adjustable Death Benefits. And Stock Market Returns
Index Universal Life Potential for Growth
A type of universal life which offers great potential for cash value growth are index universal life policies. Index ULs tie policy performance to stock market indices such as the S&P 500, Hang Seng, and Euro Stoxx. These policies allow the policy owner to benefit from the upside potential of the stock markets without any of the negative returns. It is an excellent option for individuals looking to combine low cost lifetime coverage with high cash value accumulation.
Index ULs Cap Rate vs. Participation Rate
Index universal life provides an opportunity for higher cash value growth through index accounts, which are set by the insurance company. Each index account has a maximum cap rate or participation rate which determines how much of the underlying index’s performance is earned by the policy. While the policy values are limited by the cap or participation rates; index UL’s also provide protection from volatility in the market by guaranteeing a minimum interest rate regardless of negative index performance. This ensures that any growth built in the policy is not wiped out by one bad year.Index universal life insurance are premium flexible, which means an annual premium is not required to maintain the policy inforce. As long as there is enough cash value to cover the policy, administrative, and insurance costs it will not lapse. Combine this flexibility with the cash value growth potential of an index UL policy, the coverage can remain inforce for several years without additional premium.
Index universal life are more complex than standard UL policies, it is important to understand how each policy component can affect policy values and coverage. Please contact us for more information.
