Using An IUL Calculator to Evaluate Indexed Universal Life Insurance
Universal Life Insurance is one of the many insurance products that are well known in the market, but most people are not familiar with indexed universal life insurance option. The two products appear to be similar, but they have some fundamental differences that one needs to understand.
Universal life insurance allows a policyholder to earn some interests from part of their premium payment within the policy. On the other hand, Indexed Universal Life Insurance is somehow similar to the universal life insurance policy, but it has an option of an indexed equity account or fixed account whose value is determined mainly by indexed growth. There are a variety of indexes such as S&P 500 and NASDAQ 100 that one can choose from.
Also, indexed life insurance offers one an opportunity to track major stock indexes. The fact that part of the premium payments is an equity indexed account makes the policy to be less risky as compared to variable life insurance. The performance of index funds determines the interest rate for the indexed life insurance policy.
In this case, a policyholder can create a cash value from their interest. This article will discuss the use of IUL calculators to evaluate indexed universal life insurance. Some online calculators are normally used to quickly calculate cash value accumulation and monthly premium cost IUL policy.
How an Indexed Universal Life Insurance Calculator Works
As mentioned earlier, an indexed universal life insurance calculator is normally used when it comes to calculating projected cash values for specified time intervals as well as estimated monthly premium. Indexed policies are different from variable policies as there is a guaranteed interest rate that is used to calculate cash value.
In this case, an indexed policy returns a high amount as a result of the guaranteed cash accumulation interest rate. There are some instances where the performance of indexed investments may be above the expected level, and this leads to a high amount of cash value.
Each insurance company has its compliance standards when it comes to indexed returns. Company agents are generally available to give a full ledger illustration for individuals that are not aware of how the indexed returns work.
The first step when using IUL calculator to evaluate indexed universal life insurance involves filling an online form for the universal life premium estimator. In this case, one is expected to select optional riders and complete few simple questions. You can see project cash value and instant quote instantly after completing the online form.
When it comes to premium estimation, a policyholder does not need to provide personal information. You are expected to select your age on the online form and state whether you have used any tobacco in the last 12 months or not. Also, one is expected to select the target death benefits amount. Premium costs vary depending on age, and that is why one is supposed to choose their age.
Also, tobacco users pay high premiums due to the high risk associated with smoking. Therefore, it is important to state whether you are a smoker or not as this has a critical component in the estimation of premium costs. Also, it is essential to choose your target death benefits amount for coverage estimation.
Projection of Cash Values
The IUL calculator can estimate cash values after taking the data input. The four time intervals for the base policy include; 10, 20, 65, and 75 years. The project cash value is a function of various data inputs that include; the average accredited interest rate, the target death benefits, and the client’s age at the time of application.
The main advantage of the IUL policy is that the policy allows additional paid premiums. The additional payments grow within the contract on a tax-differed basis. However, there are limitations when it comes to additional payments from IUL policies.
Moreover, one has to choose from six rider choices on the input from as they have a significant impact on projected cash values and monthly premiums. The six elective riders include; waiver of premium, long-term care, accidental death, an additional term, and guaranteed purchase.
IUL calculators help in the estimation of cash value and the premium costs of an indexed universal life insurance policy. The calculator gives you instant estimates after completing the provided online form.