A. IUL stands for Indexed Universal Life, it is a type of universal life products that allows the owner to allocate cash value of the policy to either a fixed account (with fixed interest rate) or an equity index account (tied to some well known indexes such as S&P 500, Nasdaq 100, etc.) to accumulate tax-deferred returns.
An IUL policy is more volatile than fixed UL or Whole Life, but less risky than Variable Universal Life (VUL) because no money is actually invested in equity positions.
Who Should Consider IUL?
For investors, today's low interest rate environment challenges return on cash accumulation options, many people want higher returns associated with equity markets, but are not comfortable with the higher risks associated with the higher returns.
In addition, for people with age 30-55+ and household income $50,000 - $250,000, they may have competing financial priorities, such as:
- Need more life insurance
- Need more supplemental retirement income
- Need a solution for potential long term care expenses
IUL was designed for such people to address the above concerns.
What are the major advantages of IUL compared with other insurance products? Please see our next blog post.