IUL Calculators and Product Illustrations in the Evaluation of Indexed Universal Life Insurance
Despite its surge in recent popularity, people are still not as familiar with Indexed Universal Life Insurance as its more well-known cousin, Universal Life Insurance. The two products appear rather similar, but they have some fundamental differences that you should understand before purchasing either. Using an IUL calculator can help you understand how these two similar-sounding products differ and which will be better for you.
Universal life insurance allows a policyholder to earn interest on the cash value account within their policy. Indexed Universal Life Insurance is similar, but it has the option of an indexed account or fixed account, which is determined mainly through market-linked growth. There are various indexes to choose from, such as the S&P 500 and NASDAQ 100, that one can choose from.
Indexed Life Insurance also offers an opportunity to track major stock indexes. The performance of index funds determines the amount of growth credited to the indexed life insurance policy. IUL policies cannot go down in value due to market performance, making the policy less risky than variable life insurance.
In this case, a policyholder can create a cash value from both premium payments and the growth in the policy’s index. This article will discuss the use of IUL calculators to evaluate indexed universal life insurance, which is normally used to quickly calculate cash value accumulation and monthly premium cost IUL policy.
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How an Indexed Universal Life Insurance Calculator Works
As mentioned earlier, an Indexed Universal Life Insurance calculator is normally used to calculate projected cash values for specified time intervals and estimated monthly premiums. Indexed policies are different from variable policies as there is a guaranteed interest rate used to calculate cash value.
In this case, an indexed policy returns a high amount due to the guaranteed cash accumulation interest rate. In some instances, the performance of indexed investments may be above the expected level, which leads to a high amount of cash value.
Each insurance company has its own compliance standards for indexed returns, and the best IUL companies offer very attractive indexes and growth potential. IUL Experts can create IUL illustrations before you purchase a policy and after a policy is purchased. In-Force illustrations are used to track how the index performance has impacted your future retirement income projections. Illustrations are also used during purchasing an IUL product to help the consumer understand which is the best IUL for their needs.
The first step when using IUL calculators to evaluate indexed universal life insurance involves filling an online form, selecting optional riders, and completing some simple questions. You can see your projected cash value and an instant quote after completing the online form.
When estimating premiums, there is usually no need to provide personal information. Some information, like your age, your tobacco usage, and your target death benefit amount. All of these are essential for determining your quote’s premium costs.
Projection of IUL Cash Values
After taking the data input, an IUL calculator can estimate cash values, typically with four time intervals for the base policy; 10, 20, 65, or 75 years. The projected cash value is a function of various data inputs, including the average accredited interest rate, the target death benefits, and the client’s age at the time of application.
The main advantage of an IUL policy is that the policy allows additional paid premiums. The additional payments grow within the contract on a tax-deferred basis. However, there are IRS-imposed limitations when it comes to additional payments from IUL policies.
There are many riders available that can have a significant impact on projected cash values and monthly premiums, including waiver of premium, long-term care, accidental death, an additional term, and guaranteed purchase.
If you’re trying to estimate costs vs. the value of an IUL policy, working with a highly-rated IUL expert is a good first step. The best professionals will help you identify the best potential IUL products and help you review the results from multiple IUL calculators in the form of IUL illustrations. These professionals can provide you with as much information as you need to make the best decision for you and your family.
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