Monday, December 15, 2014

IUL

Indexed Universal Life (IUL)

Indexed Universal Life or IUL is no more than a type of Life Insurance coverage that offers permanent protection with flexible premium payments and cash value(CV) accumulates on a tax-deferred(Not Tax-Free) basis and can be used in the future for any purpose the insured would like.
IUL
Under the terms of the policy, the excess of premium payments above the current cost of insurance is credited to the cash value of the policy. The cash value is credited each month with interest, and the policy is debited each month by a cost of insurance (COI) charge, as well as any other policy charges and fees which are drawn from the cash value, even if no premium payment is made that month. Interest credited to the account is determined by the insurer, but has a contractual minimum rate (often 1%,2% or 3%).

Uses of Indexed Universal Life (IUL)

  • Final expenses, such as a funeral, burial, and unpaid medical bills
  • Income replacement, to provide for surviving spouses and dependent children
  • Debt coverage, to pay off personal and business debts, such as a home mortgage or business operating loan
  • Estate replacement, when an insured has donated assets to a charity and wants to replace the value with cash death benefits.
  • Business succession & continuity, for example to fund a cross-purchase or stock redemption buy/sell agreement.
  • Key person insurance, to protect a company from the economic loss incurred when a key employee or manager dies.
  • An alternative to long-term care insurance, where new policies have accelerated benefits for Long Term Care.
  • Mortgage acceleration, where an over-funded UL policy is either surrendered or borrowed against to pay off a home mortgage.
  • Annuity alternative, when a policy owner has a lump sum of cash that they intend to leave to the next generation, a single premium UL policy provides similar benefits during life, but has a stepped up death benefit that is income tax-free.
  • and many more…
To Learn more…


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