Understanding Index Universal Life Insurance

Have you been interested in purchasing a life insurance policy, but unsure of the best type to meet your needs? One particular policy that offers flexibility with lifelong coverage as well as the potential for growth is index universal life insurance. If you are deciding upon the most suitable life insurance policy for your unique situation in San Diego, California, Windfall Insurance Services Inc. can help. Read on to learn more about how index universal life insurance works to protect policyholders and their loved ones.

How Index Universal Life Insurance Works

Index universal life insurance policies offer a cash value amount in addition to a death benefit. A portion of the policyholder’s insurance payments go towards an annual renewable term life insurance while the remaining amount is added to the overall cash value of the policy, which increases based upon the stock index performance. Index universal life insurance is essentially a policy that covers you for life as you pay for the premiums and also can help to increase your wealth at the same time. In an index universal life insurance policy, there is an opportunity for financial growth of the cash value amount during the policyholder’s lifetime, and the policyholder’s beneficiaries will receive a payout when they pass away. Since there are several different types of index universal life insurance policies available, you will want to work closely with your insurance carrier to determine the type of policy that best suits your situation.

The Advantages And Potential Drawbacks Of Index Universal Life Insurance

Index universal life insurance policies can offer a policyholder many benefits, especially if you want to take on a more active role in your insurance policy and feel comfortable taking on some financial risk. Index universal life insurance policies can offer a policyholder the flexibility to help meet their investing goals while offering better interest rates than other types of life insurance. Policyholders can also have a chance of earning a higher return on their investment while not being required to pay taxes on an increase in the cash value of the policy. Even though index universal life insurance can offer many advantages, there may be certain drawbacks to this type of policy. Since the policy is affiliated with the stock market there is an amount of involved financial risk, which can sometimes cause a policyholder to owe money to prevent a lapse in the policy. Index universal life insurance policy fees fluctuate and can increase, which could result in a policyholder withdrawing from the cash value account and the payments made. Additionally, during periods of low economic growth, you may have to pay more into your account to help it expand.

If you are interested in learning more about index life insurance in San Diego, California, contact Windfall Insurance Services Inc. today.