What is Indexed Universal Life Insurance?

What is Indexed Universal Life Insurance?

Are you interested in purchasing a life insurance policy, and confused about which type of policy to buy in order to best suit your needs? If you are leaning towards choosing a life insurance policy that has a certain amount of flexibility with lifelong coverage and has the potential for growth, you might want to think about indexed universal life insurance. If you are considering your life insurance policies in San Diego, California, Windfall Insurance Services Inc. can help to answer your questions. Continue reading to learn more about indexed universal life insurance.

How Does Indexed Universal Life Insurance Work?

james-hose-jr-6D58t6uZT5M-unsplashAn indexed universal life insurance policy has both a cash value as well as a death benefit. This type of permanent life insurance helps cover you for life as you pay the premiums and it can also help you build up your net worth. A portion of the policyholder’s premium payments go towards the annual renewable term life insurance, and the remaining amount is then added to the cash value of the policy in an indexed life insurance policy. This cash account grows based on the performance of the stock index, so ultimately, with an indexed universal life insurance policy, a policyholder’s beneficiaries receive a death benefit upon their death, and the policy has the chance of increasing in value during the policyholder’s lifetime with the cash value component.

What Are the Pros and Cons of Indexed Universal Life Insurance?

An indexed universal life insurance policy can offer several benefits, particularly if you are more comfortable with taking some financial risk and want to take a more active management role in your policy. Indexed universal life insurance policies can help you meet your investing goals and can offer higher interest rates than other life insurance types of life insurance. Indexed universal life insurance policyholders are able to adjust the policy’s death benefits as needed according to the amount of risk that they are willing to take on with the market. Also, in addition to being able to avoid paying taxes on the increased cash value, there is the potential to earn a higher return on your investment. It is important to note that there may be some possible drawbacks to this type of life insurance policy, including the factor of risk involved since it is associated with the unpredictable stock market, which could lead to being required to pay more money in order to prevent the policy from lapsing. In the event of a period of low growth, there is a possibility that a policyholder may have to pay more into an account to help it become restored.

If you are interested in an indexed universal life insurance policy in San Diego, California, contact Windfall Insurance Services Inc. for a consultation.

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Windfall Insurance Services Inc
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