High-Income Earners Are Drawn To IUL
"Most people who buy this product look to do a couple of things -- protect their assets with a death benefit and use the accumulation of the cash value to help supplement their retirement," said
Traditional universal life policies are flexible-premium contracts that credit the cash value with current interest rates and deduct mortality and expense charges.
Indexed universal life policies are linked to an index, such as the S&P 500, but place limits on the gains and, more importantly, the losses.
For example, an insurance company's actuaries may put a cap of 13 percent on the cash value portion of policy, which means even if the S&P 500 rises 20 percent in a year, the policy owner will only get a 13 percent return on the cash value of the policy. However, if the S&P fell 30 percent, the policyholder loses no principal in the insurance policy.
Indexed universal life insurance is the fastest-growing segment of the life insurance industry in terms of new customers purchasing policies and new products being offered by insurance carriers, said
"In the past five years, there have been more indexed universal life products brought into the market than any other permanent life insurance products brought into the market in the last 20 years,"
Sales data were not available, but the insurance and financial services trade organization LIMRA said the product has been a bright spot in the industry for several years. "In 2014, indexed universal life policies saw double digit growth," a spokesman said in a prepared statement, "which it has achieved in all but two quarters since the economic downturn in 2008."
The growing popularity of such policies has a lot to do with the ways they have evolved over the years.
When the policies first came on the scene in the late 1990s, they were marketed mainly to people who had
"They have flexible premiums,"
"People making less can use this,"
The ideal age for people purchasing an indexed universal life policy is between 35 and 55, according to
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