Term Life insurance is great, but it’s just that—temporary coverage. Term insurance rates are low because there is very high likelihood that you will outlive the term; insurance carriers know this. What if you’re looking for something that’s a little more, well, permanent? You have options and great ones at that.
Indexed Universal Life insurance is a Life insurance policy where the coverage can run to Age 120. There is no chance of out-living this policy so you can rest assured you will always be covered. Not only is this permanent coverage, the premiums are 100% completely flexible which leads us to the next pro.
Because the premiums are 100% flexible, this policy can be used for cash accumulation and is a tax-sheltered savings vehicle. Think of it as a “savings account” versus an insurance premium, even though it is clearly life insurance and there is a “premium” required.
Now, why would this be better suited for higher income earners? Because even though the premiums are flexible, you really would need to put in at least a $500/month figure or otherwise you would be stripping away the real value and tax savings element of the plan.
If you do not commit to a minimum of at least $500/month, then this type of program is probably not a right fit for you right now as the cost of insurance charges that accrue within the policy are higher than the normal “term insurance charges.” Therefore if you pay or “put in” less than $500/month, the insurance charges inside the policy are going to “eat away” at your premium contributions and as a result the cash values, so you will be accumulating too little. This policy is primarily all about cash accumulation and while it does serve as a life insurance program, the life insurance aspect comes secondary to the “cash accumulation account” feature.
Again to recap, Term Life insurance policies are great and help provide peace of mind for the inevitable, but what about right now? Indexed Universal Life is a policy for the here and now; why not look into a supplemental, more permanent solution?
To learn more about this type of policy, please contact us today.