Can IUL Meet Your Needs?
Indexed universal life insurance pros and cons
With their ability to grow cash value linked to equity returns, combined with tax-deferred growth and tax-free access to your funds, IUL policies can be an attractive option for those who are seeking death benefit protection and potentially higher returns. However, the purchase of an indexed universal life insurance policy will typically be a long-term endeavor, as optimal returns may or may not be achieved within a short period of time.
Therefore, it is important to fully understand whether or not IUL is right for you – and if so, how your policy can be structured to meet your specific needs. Working with an advisor who is well versed with “indexed universal life insurance pros and cons and can provide you with the details that you need for your situation.
Indexed universal life insurance is not a one-size-fits-all solution for all financial needs. But, while it may not be right for everyone, IUL could be a good fit for you if:
You’re seeking market linked returns, yet without the downside risk.
You want to lock in your cash value gains.
You want to ensure that your principal is protected.
You have maxed out your IRA and/or qualified retirement plan contributions, but you still want to add more funds to a tax-advantaged account.
You want the opportunity to access your cash value tax-free for supplementing retirement income or other financial needs.
You want to provide your loved ones with financial protection in case of the unexpected.
When determining whether indexed universal life is right for you, there are some factors to consider prior to moving forward. These are the Indexed universal life insurance pros and cons:
How much death benefit you need.
The policy’s maximum annual increase, or cap, as well as the participation rate.
The guaranteed minimum interest rate, or floor.
The index (or indexes) that the policy tracks.
If or how you may want to access the policy’s cash value in the future.
The financial strength and ratings of the insurance company you are considering purchasing the policy through.