Four Overlooked Benefits Of Indexed Universal Life Insurance Policies

Posted on: 9 April 2016

If you've done your research, you understand that an indexed universal life insurance policy differs in many ways from traditional policies. While not for everyone, those who invest in these policies are afforded a number of benefits not generally available with other policies.

Lower Premiums

Insurance premiums can be costly.  One of the advantages of this type of policy is that your premiums are typically on the lower side. With other policies, premiums are often more expensive due to the fact the insurance company is assuming all the risk. They make up for this and protect themselves by charging the customer more money. With an indexed universal life insurance policy, you assume the risk, which in turn allows you to pay a lower monthly premium for your policy.

Increased Flexibility

An indexed universal like insurance policy gives you greater control. With traditional polices, the death benefit is fixed and can't be changed unless you take out a new policy. This option allows you to determine how much will be placed in your fixed account and how much in your indexed account, which ultimately allows you to adjust the death benefit value. These polices also come with rider options that allow you to layer your coverage without having to purchase a new policy.

Unique Cash Value Terms

The fact that the cash value of these policies accumulates is only one beneficial factor. The fact that you have more control over how to use this growth is what's important. As the value of the policy grows, you can start applying this money towards the premium cost. This allows the policyholder to reduce their out-of-pocket share for their premium or in some instances, frees them up from having to make any contribution towards the premium. It's also important to note the growth value is tax deferred.

Fewer Risks

The stock market is all about up and down. Some days you win, some days you lose. For this reason, when your policy is invested into the stock market, this doesn't create for the most solid financial future because a downturn in the market can also mean a downturn for your policy. Indexed life insurance policies are not directly attached to the stock market. Instead, you get the opportunity to take advantage of other options, such as equity account investing, which can keep your policy more secure.

Choosing a life insurance policy to invest in should be a decision you make with care and patience. Make sure you are taking your time to choose the best option for your needs.