Should you be buying Equity Indexed Universal Life Insurance (EIUL)? For most of the population, the answer is no. If you answer “yes” to any of the following questions, then you are one of many people who should not purchase Equity Indexed Universal Life Insurance:
1. Do you or will you have a net worth of less than $500,000?
2. Upon retirement, will you see a drop in income?
3. Do you have any dependents or are you planning on having any dependents?
4. Do you possess any assets that need protection?
For those of you who were able to answer in the negative to all of the above, what do you really know about Equity Indexed Universal Life Insurance?
An Equity Indexed Universal Life Insurance is a type of permanent life insurance, which means it does not end until the holder passes away. Equity Indexed Universal Life Insurance comes with a fixed interest based on the performance of the stock market. Your rate of return is based on how well the stock market does, but there is both a ceiling and a cap on the amount of interest. If the stock market does well, theoretically, you will receive high returns. Unfortunately, sales illustrations for Indexed Universal Life policies are currently under investigation for misleading information regarding the prospected rate of return. Sellers are promising higher rates of returns than actually expected or possible.
All insurance policies, Equity Indexed Universal Life Insurance policies included, tend to have ongoing fees and charges that increase over the lifespan of the policy. For permanent life insurance types, such as Equity Indexed Universal Life Insurance, these fees and charges can become exponentially high.
The increasing fees and charges as well as the likelihood of low return rates means buyers of Equity Indexed Universal Life Insurance run the risk of losing money. Furthermore, there is still surrender charges associated with Equity Indexed Universal Life Insurance for early termination. These surrender periods typically go for a very long time – upwards of 10 years. If you plan never to terminate your Equity Indexed Universal Life Insurance, then the high surrender fees won’t be a problem. Except, most people do end up terminating their Indexed Universal Life Insurance policy (IUL) before the surrender period is over.
Before purchasing any kind of Indexed Universal Life insurance policy, make sure you are making the right choice. For most people, Indexed Universal Life insurance policies are not the right choice.
Sellers of Indexed Universal Life insurance policies include Minnesota Life, Penn Mutual, Midland National Life, National Life (Vermont), AXA Equitable Life, Lincoln Financial, Pacific Life, Transamerica Life, and John Hancock Life. If you have purchased an Indexed Universal Life policy from any of these and would like a free and confidential legal evaluation of it, contact the Evans Law Firm, Inc. at 415-441-8669 or info@evanslaw.com.
