What are the pros and cons of indexed universal life insurance – What is index universal life insurance? http://www.RetireSharp.com 1-800-566-1002. What are the best types of indexed universal life insurance for retirement and learn how you can avoid the most common mistakes that individuals have made when looking to purchase an index universal life insurance policy.

Some Facts About indexed Permanent Life Insurance

If someone wants to be sure they have life insurance when they die, no matter when that it is, they will need a permanent policy. That's why it's called permanent. All permanent policies allow for cash value accumulation.

Not all permanent insurance policies are equal.

Whole life

The most secure, fully guaranteed policy is a whole life policy. The premium and the death benefit are established at the time of purchase. The premium is guaranteed to never increase. The death benefit is guaranteed and could possibly increase. It has a guaranteed cash value.

Universal life

This type of policy is a cross between term insurance and whole life. It has a guaranteed death benefit that could increase but the premium amount is not guaranteed never to increase. Many consider the minimum premium very attractive. It also has a target premium. If the target premium is paid, although not 100% guaranteed, the likelihood the premium will not increase is high. The cash value is not guaranteed.

The key to this type of policy is to make sure there is cash value in the policy. If the policy has no cash value additional premium must be paid or the policy will lapse.

There are variations of universal life. The most common are variable universal life and indexed universal life. The difference is how and where the cash value is invested by the insurance company. A variable policy allows for money to be invested in the stock market, which could result in a loss of cash value. The indexed policy mirrors the stock market but is not directly invested in the market and can enjoy some of the gains of the market but will not suffer any of the losses.

Which is best?

It's a personal choice.

Whole life policies are for the person who wants the peace of mind for the duration of life and doesn't want to have to ever worry about the cash value, the premium, or the death benefit. It's a once and done deal. It also has the highest initial premium, although that will never increase.

Universal life policies are for the person who wants to be covered for the duration of life but understands the premium and cash value are not guaranteed. It allows premium flexibility as it has a minimum, a target, and a maximum premium that can be manipulated depending on one's needs and affordability.

Benefits

All life insurance has a tax-free death benefit. The cash value of a permanent policy allows people to use the accrued cash while alive. The most common uses of cash value are retirement planning and college planning.

Life insurance enjoys tax favorability that few if any other vehicles enjoy.

It's about protection, safety, and transferring risk rather than assuming risk one's self. It's intended to be used an investment that will net safe, predictable returns, not high returns.

Between 80% and 90% of permanent policies stay with people the duration of their life and pay death benefits.


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