An Indexed universal life insurance
is a policy is permanent insurance that offers great flexibility for premiums and adjustments for face amount. The indexed accounts are credited with interest based on the growth in one or more indexes and there is a guaranteed growth rate within the policy. Life insurance is designed to protect your loved ones if there is a premature death in your family.
Indexed universal life insurance can be a great savings vehicle for investors who have a good ability to save.IUL, is a type of permanent life insurance that allows a user to build a cash value. The cash value can be invested in a fixed account that often has a guaranteed minimum interest rate or the user can derive their returns based on several different equity indexes.
There are several crediting methods that can be used to generate returns on the cash .
The common method I see is an annual point to point calculation based on the return of the S&P 500 with a cap rate that protects your principal and limits your upside. When you pay your annual premium, the insurance company deducts some of the premium for state taxes, cost of insurance, and a sales load. After the fees are taken, most of your money goes to the insurance company’s general account and a small portion buys derivatives on whatever index the user selects.
Does IUL actually offer principal protection?One of the hallmarks of IUL marketing is the idea that IUL offers upside potential and downside protection. The former part is certainly true, but the latter is less certain.IUL only offers downside protection in the context of other life insurance policies that also have fixed cost policy expenses. In IUL, fixed policy expenses can go as high as 30% of a fully funded (7 pay maximum non-MEC premium) after only 10 years.
Creditor protection is a collective term that is used in two different ways. One common use has to do with the various resources that provide debtors with an equitable amount of protection from creditors in the event that the debtor is unable to pay off an existing obligation according to the terms and conditions related to the transaction. The other application of this term has to do with the protection of creditors, in terms of limiting the loss incurred when a debtor defaults on an outstanding debt.