In addition to offering a declared interest rate, IUL offers the ability to earn interest that is linked to the movement of a specified stock market index over a specific time. The way is which interest is credited gives you the potential for strong cash value accumulation. IUL policies also offer protection in a poorly performing market. Most carriers will split your premium into two pre-selected accounts.
The first is the Fixed Account, and the second called the Index Account. You, the policy holder can select which account your premiums go into. Most carriers will declare a fixed rate on the fixed account between 3-5% depending on the carrier. For the Index Account the carrier will set an Index Cap Rate and an Index Floor Rate. So think of your premium being split into two buckets. One bucket will grow at a Fixed Rate, and the other will grow depending on your selections and the carriers Index Cap and Floor Rate.
Either way, IUL policies build cash value that can be accessed by Partial Withdrawals and or policy loans. Most partial withdrawals are generally tax-free. You can also access the cash value with low-interest policy loans. IUL’s have been used to generate tax free income used for anything you want but there are many important considerations when taking funds from a life insurance policy. Make sure you discuss all of your options before obtaining a policy loan.
To learn more about Indexed Universal Life Insurance products,or to get specific carrier Brochures, feel free to call or email with questions.