Indexed universal life policies put a portion of the insured premium payments toward a term life insurance with the remainder added to a cash value of the policy after the fees are deducted. The cash value is credited interest based upon increases in an equity index (i.e., S&P 500 Index). These policies provide greater upside potential, flexibility and tax-free gains. Indexed universal life insurance offers permanent coverage as long as the premiums are paid and pay a death benefit and a cash value to the policy owner.
Benefits of Indexed Universal Life Insurance
Higher Return Potential — Allow gains to the cash value based upon equity indexes without the risk of market losses. The annual rate of return will depend on how well the index you are invested in performs. Insurance companies can still offer a guaranteed minimum return on your investment.
Ability to create tax-free cash flows — By utilizing policy loans, policyowners can avoid federal, state and local income taxes and create a totally tax-free cash flow. In addition, these life insurance policies provide a tax-free death benefit to the beneficiaries.
Tax-deferred growth — The cash value that accumulates over the life of the policy is tax-deferred.
Tax-Free Death Benefit — Your beneficiary or beneficiaries will receive a lump sum payment upon your death. This benefit is tax-free, so your beneficiary or beneficiaries can keep the full amount.
Life-Long Insurance without paying your lifetime — Once a policyowner stops making premiums and starts taking cash flows as policy loans, your life insurance death benefit does not end. If set-up correctly, policy owners can continue to be insured for a death benefit for the rest of their lives.
Critical or chronic illness rider — This rider added to your policy allows you to tap into your life insurance policy’s death benefit while you are still living. Critical illness are specified health conditions, such as heart attacks and strokes, while chronic illness is the inability to perform a certain number of daily living activities. This will allow the policyholder to manage these types of situations better.
Accelerated death benefit riders — Also known as a “terminal illness rider,” and allows the policyholder to access the death benefit before they die. This will allow the policyholder to manage the situation with many medical bills which may occur during this timeframe.
Schedule a Meeting to Learn About Universal Life Insurance
Not sure where to start? Contact Safe Harbor to learn more about indexed universal life insurance options. We offer a complimentary consultation to review your current coverage and can provide a life insurance strategy that will provide the coverage your family needs. Call our office at (614) 760-0670 to schedule your initial consultation.