Indexed Universal Life Insurance
Indexed universal life insurance provides lifetime coverage with significant room to invest and grow your money.
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What Does Indexed
Universal Life Insurance Cover?
Indexed universal is a specific type of universal life insurance. It allows for more control and potentially significantly increases your investments, while still providing your beneficiaries the payout out when you as the policyholder pass away.
This payout is referred to as a death benefit and can range anywhere from $200,000 to more than $1 million. This is standard for all types of whole life insurance. However, with indexed universal life, this can increase by hundreds of thousands of dollars.
You need to know your investment strategies and generally “know what you’re doing.” Most agencies will even recommend using an advisor to buy and manage your policy.
Your investments will change depending on the stock market. The cash value will start building off of your premium payments. Once it reaches a certain point, your cash value may grow to the point where you do not need to make premium payments.
The cash value can also decline. Investments are unstable, especially in such an involved policy like indexed universal life. But, the potential reward is substantial.
Universal Life Policies
A guaranteed, or traditional, universal life insurance policy also focuses on control over investments. But, unlike indexed universal, the potential cash value will be smaller, you cannot adjust your premium or death benefit, and your coverage may lapse if you miss a payment. It is also the least expensive.
Indexed universal life lets you track gains and losses relative to stock indexes. This means that you can adjust your premiums and death benefit based on it.
So, you won’t lapse coverage if you skip a payment or pay less than the set premium. There are certain caps in place on “over-investing,” but you have far more control. This also means that there is more management involved, so if that won’t work, it may not be for you.
Benefits of Indexed Universal Life
Indexed universal life is a manageable plan with room for growth. Another type of policy is called variable universal life—this requires even more close management than an indexed policy and comes with more risk if you fail.
So, in terms of universal life policies, it is a potentially valuable “middle ground” between guaranteed and variable policies. You have plenty of room to grow without the strict limitations of, say, a whole life plan. And, if you are stock-savvy, it is an excellent opportunity.
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BIM can help you determine your best life insurance policy. Call today at (732) 458-5000.