Life insurance is an extremely important investment that you’ll make for your family. There are dozens of different kinds of plans that you’ll need to compare when trying to find the perfect plan to meet your needs. Each kind of life insurance plan has different advantage and disadvantages that you’ll need to consider to ensure that you’re getting the best plan for you and your family.
One type of plan that is often misunderstood is an indexed universal life insurance policy, these plans have several unique advantages that you should be aware of when shopping for life insurance protection.
There are a lot of questions surrounding these indexed universal life insurance plans. It’s vital that you understand the policies and all of your options to ensure that it has the protection that you need. In order to help you understand these plans, we are going to show you an example of one of our clients.
It was a couple weeks after Ron’s birthday when he watched his son pull out of the driveway and leave for college. Ron knew he had to turn his retirement savings up a notch. Ron decided to buy indexed universal life insurance at age 41.
It was the day that he had both longed for and dreaded for several years. His son’s life at home with mom and dad had come to an end.
Ron spent some time deciding what he was going to start doing with the money he had been putting away every month into his son’s college fund.
Indexed Universal Life Insurance At Age 41?
Sure he had fantasies of what he would have liked to start doing with the money, what dad doesn’t.
A small cottage in the mountains, an old corvette, a yearly vacation, these were all thoughts that started consuming his mind as Ron would take his evening walk through the neighborhood. With retirement growing closer, he finally decided that it only made sense to use the money as an investment instead of another payment.
He called us and set an appointment to discuss the options we could make available for him. He didn’t have to listen for very long once we started discussing indexed universal life insurance policies.
These policies first became available in 1997 through Transamerica. There are over 40 life insurance companies which offer indexed universal life insurance today, with new companies being added to the list each year. These policies offer permanent protection and have the ability to earn market like returns. Regardless if your goal is to cover business or personal needs, this can be the option that makes the most sense.
Ron’s goal was simple. We designed the indexed universal life insurance policy to grow in cash value to later create a tax-free income stream.
Your premium payments are able to earn interest and increase the cash value of your policy. The cash value may be used towards supplementing your retirement or financing anything you would normally use a bank for such as a car, boat, home improvements or just whatever.
Ron will have other assets working for him such as a 401k program or other investments. So in Ron’s case the goal of this policy is to build cash value and take an income stream. Remember this income will be tax-free.
Ron was able to buy 2 policies. He bought one on himself and also for his wife Linda. They each put $5000 a year into the policies. We designed the policies to have very little life insurance – the intent is to build cash value. The lower the amount of life insurance the less the expenses in the policy are.
With an average return of 7%, Ron would have a policy cash value of around $280,000 by the age of 65. This would create a tax-free income of around $25,000. Ron’s policy death benefit started out at $117,000 but by the time he reached age 65 the death benefit had grown to around $380,000.
Linda is also the same age as Ron. Her $5000 per year would buy a policy with about $162,000 in death benefit. When Linda is 65 years old, her cash value in the policy would be about $260,000 and the income her policy would provide would also be around $25,000 per year. The death benefit would have grown to about $420,000.
Ron made a great decision to buy indexed universal life insurance at age 41. The income from both policies will be around $50,000 per year plus they will provide a lump sum life insurance payment when they die.
What a great deal for Ron and Linda.
Life Insurance Alternatives
As you can see, an indexed universal life insurance policy isn’t the simplest form of life protection. There are a lot of applicants that just want to get the easiest form of protection for their family at an affordable rate. There are several different kinds of protection that you can choose from.
The most common type of life insurance is a basic term life insurance plan. These plans are bought with a pre-determined expiration date attached to them, and after that date, the plan is no longer active. At that point, you’ll need to purchase a new life insurance policy if you want to get insurance protection. Because these plans are only effective for a certain point, they are going to be the most affordable life insurance plan to meet your needs.
Another option for your life insurance coverage is to purchase a whole life insurance plan. These plans are a permanent form of coverage, as long as you continue to pay the premiums, you’ll have life insurance protection. These plans are a great option for anyone that doesn’t want to have to reapply for life insurance in the future.
There is a unique benefit to these plans, and it’s that these plans build up cash value inside of the policy. The longer that you pay the monthly premiums, the more value that’s accumulated. You can use this cash value to pay the monthly premiums or invest.
Getting Affordable Life Insurance Coverage
One of the most common reasons that people don’t buy life insurance is because they assume that it’s going to be too expensive for them to fit in their budget. In most cases, that couldn’t be further from the truth. There are several ways that you can ensure that you’re getting the lowest insurance rates available.
One of the first things that you should do is start a healthy diet and get regular exercise. Both of these can have a huge impact on your health as well as your insurance premiums. They can help you shed those extra pounds, lower your cholesterol, reduce your blood pressure, and much more. All of these are going to translate into better rates from the insurance companies.
The next thing that you should do is eliminate any tobacco that you currently use. If you’re listed as a smoker on your life insurance plan, you can expect to pay twice as much for coverage versus what a non-smoker is going to pay for the same amount of life insurance. If you want to get the most affordable life insurance policy, you’ll need to kick the bad habit once and for all.
The best way to ensure that you’re getting the lowest insurance rates is to work with an independent agent, like ours. Unlike a traditional insurance agent, independent agents work with dozens of highly rated companies across the nation. Our agents can bring all of the best rates directly to you without the hassle of calling all of the companies yourself.
We know that your time is valuable, don’t waste it talking on the phone with dozens of different companies. We can help you compare the rates from multiple companies instantly.
We can design the same type of policy for you too. Just give us a call today at 1-800-712-8519 or request a quote on the left of this page so we can design a proposal for you.
If you have any questions about an indexed universal life insurance policy, please contact one of our agents today. We would be happy to answer those questions and ensure that you’re getting the best plan to meet your needs. We know that finding the best life insurance protection can be a long and difficult process, but it doesn’t have to be. Our agents can make the process as quick and simple as possible.
You never know what’s going to happen tomorrow, which means that you shouldn’t wait any longer to get the life insurance that your family deserves. Contact one of our agents today and we can get the process started. It’s our mission to ensure that you have the best life insurance policy at an affordable rate.