How to Choose Between Whole Life and Index Universal Life Insurance(2)
Index Universal Life
Representative companies: AIG, Pac Life, Nation Wide, etc.
IUL is a product that emerged after a lifetime, but it is also 20 years old in the United States.
First, its benchmark on return on investment is of interest. When the market goes down, the bottom yield of the IUL is 0%. When the market is going up, you can take advantage of some of the success of the upside, but when the market goes down, then there is no interest, the fruits of the previous victory are still there. To summarize briefly, this method of calculating interest is actually "depositing non-fixed interest".
Each company chooses a different index, and the interest calculation strategy is different. On the whole, it is essentially the s.P. 500, the European Blue Chip 50, the Hong Kong Hang Seng, the Dow Jones or NASDAQ, all of which have credible clues. Compared to dividend-based insurance, the characteristics of index interest are open and transparent, and the potential rate of return will be much higher.
Third, the premium is flexible. Or use the same woman 30 years before, using IUL to make a plan. The first year premium can be paid between 8370 and 25120. As you can see, you can pay 8370 to buy a 1 million policy, or 251.2 million to buy a million policies. More freely choose an amount between the two.
The maximum contribution limit is designed to allow the police to pass the IRS life insurance test, which results in partial exemption from income tax later. If the payment limit is exceeded and the premium is overpaid, the future increase will be subject to additional income tax.
In addition, how much money can be paid later can also be adjusted, such flexibility will also make life more convenient. Of course, the payment is not the same, the future growth of the monetary value of the policy will be different. The amount of the cash value determines how much money you can take later.
Since the income situation is more optimistic compared to the above dividend insurance, the premium of IUL will therefore be much cheaper than dividend insurance. In other words, if you buy a policy with the same amount of coverage, the IUL premium will be 1/2 or more cheaper (depending on the age of the client).
Of course, the benefits and risks correspond, and the UIL has its own risks. Faced with the extreme market risk, that is to say that the large market index does not fluctuate every year, the cash value does not cover the cost of protection, the policy will be exposed to risk. In this regard, the client should have a clear understanding of the circumstances under which the risk will occur and the likelihood of it being, combined with the extent to which it is exposed, to determine whether it is suitable for them.
Overall, the above two types of products have their own characteristics, there is no absolute difference between good and bad, to see the customer's needs and risk tolerance. Life insurance is a very complex system, and the products are very different. Buying insurance really can't just look at these beautiful numbers, please find a professional agent to help you analyze, only the right you, is the best.
