Indexed Universal Life insurance policies are a type of permanent life insurance policy that bases its gains on how the stock market performs. If the stock market is doing well, then gains are higher and vice versa. However, some insurance agents may be providing buyers with misleading information that suggest future gains will be higher than they actually will be. As such, buyers of Independent Universal Life insurance policies end up getting less out of their policy than expected. Before purchasing an Indexed Universal Life policy, or even if you have already bought one, consider the following concerns:
– Indexed Universal Life policies are “permanent” life insurance – they end when the holder dies. That means insurance expenses will increase until the holder dies and these increases can be substantial.
– People who buy permanent life insurance policies tend to cancel them in under 10 years, making term life insurance policies, policies that are limited to a specific length of time, a better choice.
– Indexed Universal Life policies are better for the affluent.
– Unless there is enough accumulated interest to pay for future annual cost of keeping the Indexed Universal Life policy or other permanent life insurance policies, holders will have to seek funding elsewhere to pay for the costs.
– Keep alert for advertising suggesting a holder borrow from their own Indexed Universal Life policy to help fund retirement needs because there may not be enough accumulated interest to help pay for retirement needs.
– Insurers exclude reinvested dividends from interest calculations and reserves the right to change the cap on how much interest they will pay.
– Insurers put money invested into an Indexed Universal Life policy into bond-heavy investment portfolios, not stocks.
– What actually affects the Indexed Universal Life policies isn’t the stock-market performance, but financial derivatives.
Keep these considerations in mind when thinking about buying an Indexed Universal Life policy. Thoroughly discuss your options with family and friends because Indexed Universal Life policies are not right for everyone.
Some sellers of Indexed Universal Life policies include Minnesota Life, Penn Mutual, Midland National Life, AXA Equitable Life, Lincoln Financial, Pacific Life, Transamerica Life, and John Hancock Life. If you have purchased an Indexed Universal Life policy in California and would like a free and confidential review of it, contact the Evans Law Firm at 415-441-8669 for via email at info@evanslaw.com.
