What is Indexed Universal Life Insurance?
Indexed Universal Life (IUL) insurance offers individuals financial protection for their families in the event of one’s passing. However, it is much more than just a death benefit. IUL policies provide several living benefits, including financial support in the case of chronic, critical, or terminal illnesses.
Living Benefits of IUL
One of the most significant advantages of an IUL is the ability to access a portion of the policy’s death benefit while still alive. If the policyholder faces a chronic, critical, or terminal illness, they can use these funds to alleviate financial burdens. This feature ensures that the policyholder and their family are better prepared to handle unexpected medical expenses and other related costs.
Cash Accumulation Potential
A little-known benefit of an IUL is its cash accumulation potential. By participating in the upside growth of indexes such as the S&P 500, policyholders can benefit from market growth while enjoying downside protection through guaranteed floors. This means that even if the market performs poorly, the policyholder’s accumulated cash value remains protected.
Tax-Deferred Growth and Flexible Access
An IUL allows for tax-deferred growth of a portion of the premiums paid. This means that the accumulated cash value can grow over time without being subjected to immediate taxes. Additionally, these funds can be accessed tax-free if structured properly by a financial professional. Policyholders can use this money to supplement their retirement income or for any other financial needs they may have.
Conclusion
Indexed Universal Life insurance offers a range of benefits that go beyond traditional life insurance. From living benefits and cash accumulation potential to tax-deferred growth and flexible access, an IUL can provide financial security and peace of mind for both policyholders and their families.
