Renwanz Insurance & Financial Solutions, Carlsbad, CA
Yes, Indexed Universal Life Insurance works. If your goal is to build up cash value inside a life insurance policy that can offer financial flexibility later on, then it can work great.
Universal life insurance accumulates cash inside the policy due to the success of a financial index such as the S&P 500. Most companies give you choices of individual indexes or blends of several indexes and offer a "floor" of zero or 1%. It is important to note that your money is NOT in the stock market. Interest is credited to your account if the referenced index goes up over a pre-selected length of time.
Generally, insurance companies will put a cap on the amount of upside you can get because they are guaranteeing you no downside if the index goes down. Often, the caps can be 13% - 17% with blended index choices.
Make sure you set reasonable expectations for what "success" is, though. Building significant cash value inside an indexed universal life insurance policy doesn't happen over night. You should allow 10 to 15 years for accumulation for college education costs or a retirement income stream. And remember, even if you use the available cash build-up over the years, you still have the death benefit to pass on to your family upon your passing.
As always, it is all about "fit" when it comes to financial products and Indexed Universal Life is no different. The design of the IUL is important and best left in the hands of an experienced, licensed financial professional.
That's a great question! The answer really kind of depends upon how much work you want to put into it to ensure it works. This kind of policy requires that you pay attention to its performance, and that you do your part in looking for a policy that has the best cap rate, highest participation rate, minimal surrender fees, and greatest guarantees. You will also need to be aware of your cash value, and the fees that are coming out of it. Can it work? Yes, but this is not the type of policy that you can make minimum payments on and forget about, unless you'd like to find out in a few years that it's in trouble, and so are you.Especially if the market has been volatile, or taken a down turn. I hope that helps, thanks for asking!
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Your state insurance commissioner is charged with making sure the policies sold in his state “work.” The data upon which the policies are based is sufficient to predict that the company will be able to keep its promises. The theory is that the company will invest the cash value into investments that mirror the particular index selected. Since they rarely pay the full increase demonstrated by the index there is enough room to make sure that they can meet their obligations.
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Universal life insurance accumulates cash inside the policy due to the success of a financial index such as the S&P 500. Most companies give you choices of individual indexes or blends of several indexes and offer a "floor" of zero or 1%. It is important to note that your money is NOT in the stock market. Interest is credited to your account if the referenced index goes up over a pre-selected length of time.
Generally, insurance companies will put a cap on the amount of upside you can get because they are guaranteeing you no downside if the index goes down. Often, the caps can be 13% - 17% with blended index choices.
Make sure you set reasonable expectations for what "success" is, though. Building significant cash value inside an indexed universal life insurance policy doesn't happen over night. You should allow 10 to 15 years for accumulation for college education costs or a retirement income stream. And remember, even if you use the available cash build-up over the years, you still have the death benefit to pass on to your family upon your passing.
As always, it is all about "fit" when it comes to financial products and Indexed Universal Life is no different. The design of the IUL is important and best left in the hands of an experienced, licensed financial professional.
The company controls the fees, the costs, the mortality charges.
They send you a bill for it all. The cash value is used for this when the policies are funded at the correct level.
The problem is when the agent shows you an illustration that has a higher than 6% rate of return.
Don't fall for this trick.
And remember there is the average return and then there is the actual returns.