Best IUL Products for You
Indexed universal life insurance can offer so much more than just life insurance protection. This flexible financial vehicle can also provide you with a way to build up savings tax-deferred, and allow you to access your funds tax-free for supplementing your income in retirement.
But, not all IUL policies are created equally, so it is essential that you do some research before moving forward with the purchase of a policy and it is always a good idea to consult with an IUL expert before purchasing the best IUL products or policy. Doing so could end up saving you a great deal in premium cost, and can also open up an extensive list of other options that can ensure that you have the plan that is best suited for you.
There are a number of factors to consider when seeking the best IUL products and service provider, such as:
One of best ways to determine whether or not an insurance carrier is strong and stable financially, and that it has a good reputation for paying out its policyholder claims, is to review the ratings.
Typically, life insurance carriers are “graded” by one or more of the insurer rating agencies – these are A.M. Best Company, Standard & Poor’s, Fitch, and Moody’s. In most cases, it often best to select an insurance company that has a rating of ‘A’ or better.
When considering an IUL policy, index caps can be an integral part of the overall performance of the policy. In this case, the higher the cap on the policy, the more your cash value can earn in an “up” market. Different insurance carriers – and even different IUL policies – can offer differing index caps. Although Index Caps are important, they are not the only factor and sometimes a higher cap does not mean a better policy for you. Always talk with a professional to make sure you are getting the best policy for your needs.
Policy Loan Options
Because one of the key features of an IUL policy is the ability to access your cash tax-free, it is important to check out the loan options on a policy that you are considering. Indexed universal life insurance policies will usually have two loan types. These are fixed or variable.
With a fixed policy loan, the portion of your funds that you are borrowing against will be moved into the fixed interest allocation within the policy. With variable rate loans, the funds will remain allocated to the index option(s) that you have chosen.
This means that, even though you have borrowed a certain amount of money against the policy, you will still be able to continue earning interest credits on your funds. In some cases, you may be able to switch between the two types of loans in an IUL policy. This can provide you with a great deal of control and flexibility.
If you plan to borrow money from your IUL policy, you will also want to know if the policy that you’re considering has overloan protection. This can help with ensuring that your policy won’t lapse when you have a loan against it.
Virtually all financial vehicles will have at least some amount of fees or expenses associated with them. Indexed universal life insurance is no different. But even so, when obtaining an IUL policy, you will want to be sure that you are able to keep these charges as low as possible. This is especially the case if you plan to keep your policy for many years. With that in mind, inquire as to how much and where fees will be (or could be) incurred but keep in mind that some Riders and Cap Rates, etc. come with higher expenses and like most things in life – sometimes you get what you pay for.
Just like with many of the other products and services that you purchase, there can be differences in the premium charged for IUL insurance policies from one insurance company to another – even for the very same type and amount of coverage. Therefore, be sure to compare several different IUL premium quotes prior to obtaining your plan.
Today, many life insurance policies offer “living benefits.” This means that the insured can access some or all of the policy’s death benefit to use while still alive. Typically, a policyholder will qualify for a living, or accelerated, policy benefits if they are diagnosed with a terminal illness, and/or if they must be confined to a skilled nursing facility.
The Bottom Line on IUL Carriers
There are many options available when it comes to indexed universal life insurance. There are also many “moving parts” that are associated with these types of policies – which can make the process of finding the best policy for you somewhat challenging.
The good news is that there are financial professionals who specialize in this type of policy. To find the best iul products that will work the best for your specific situation, it is important to look for highly-rated insurance carriers and to work with an IUL expert who can walk you through the IUL policy evaluation process.