Indexed universal life insurance was created back in 1997 by Transamerica. We now have more than 20 years of IUL history to draw from. We are still excited about using indexed universal life insurance as a way to accumulate cash on a tax-deferred basis and take an income stream on a tax-free basis.
We have clients from many different occupations, income levels and ages that use indexed universal life insurance not only as life insurance but also as a retirement income tool.
The age of working for a company 30 to 40 years and then receive a pension for the remainder of your life are over. If this is important to us, we have to create our own private pension plan.
We purchase life insurance to pay off our debts and replace our income due to premature death. We purchase life insurance to take care of our family or business partners if we die too soon.
The death benefit of life insurance can help your family get through a difficult time by providing cash when it is needed the most.
But what about you?
In addition to the death benefit, a great reason to own Indexed universal life insurance is for the potential tax-free income that can be generated during retirement. Which companies offer the best indexed universal life insurance policies? This is a very important question since these purchases are very long term and need to perform well in order to reap the most benefit. Certainly, it makes good sense to find the top rated life insurance companies because they will live up to their promises.
We offer indexed universal life from many of the top carriers and if you would like to receive a personalized quote you should click on the quote box to the right of this page.
There are around 40 different carriers in the indexed universal life market place today. Each of those carriers may have several different policies that they offer. We feel like we can only recommend a handful of these carriers which we consider to be the best rated life insurance companies for IUL
Here is our list of best companies for indexed universal life insurance:
- North American / Midland National (Sister Companies owned by Sammons Financial)
- Minnesota Life
We also have a favorite go-to company for indexed universal life insurance. Currently in first place is the Builder Plus IUL from North American. This indexed UL policy has an interest multiplier, 1% interest bonus, and critical and chronic illness coverage. The policy is ideal to use as a LIRP or 7702 plan.
Here is a brief overview of the Builder Plus IUL:
How Do You Know Which Companies Offer The Best Indexed Universal Life?
Table of Contents
Let’s look at the 9 areas that I see are most important in choosing an indexed universal life policy.
- Ratings – Each year insurance companies are rated by 4 major rating agencies for their financial strength and ability to pay claims. AM Best and Comdex ranking is what we pay the most attention to. The higher the AM Best and Comdex rating the better. AM Best top is A++ and Comdex best is 100 so let’s make sure we use the top rated life insurance companies for your IUL.
|Company||Comdex Ranking||AM Best|
|North American / Midland National||90||A+|
|American National Life||78||A|
- Index Caps – Index caps are important to the performance opportunity in the policy. The higher the cap the more interest can earn. The most used and simplest to understand S&P 500 index allocation. The range of these caps is as low as 7% and as high as 16% with the average being around 12%. These caps can change so it is important to use a carrier that has historically held caps steady. All of the carriers listed above have caps above 12% which makes them ok with us.
- Money Sweep Policy – It is very important to have your premium dollars go to work for you as soon as possible. The sweep options are daily, monthly, quarterly and yearly. We prefer daily sweeps so that no matter when you send your premium your money goes to the indexing account The only carriers that do this is North American and Midland (Sister Companies both owned by Sammons)
- Low Policy Expenses – Over the course of 20 – 40 years, policy expenses can really add up. A recent comparison by Brett Anderson of IULDIGEST.COM of policy expensive for a 50-year-old male preferred non-smoker showed a range of $31,000 to $81,000 over a 20 year period. That is a $50,000 difference from the cheapest to the most expensive. The companies we have listed are in the low expense category.
- Accelerated Benefits – These are chronic, critical and terminal illness benefits and allow the owner of the policy to accelerate a portion of the death benefit should they experience any of the above. Again, these carriers all have strong accelerated benefits.
- Loan options – This is a very important feature to look for in an Indexed Universal Life policy if you intend on using your policy as an income supplement. Policies basically have 2 types of loans, fixed and variable. When you borrow money against your policy, variable rate loans allow your funds to stay allocated to the index options of your choosing thereby continuing to earn interest credits. With fixed rate loans, the portion of your money that you are borrowing against is moved to the fixed interest allocation within your policy. Being able to switch between these two loan types is important because things change over 20 to 40 year periods and you need flexibility. You will also want to make sure that your variable loan rate is capped. We see most of these loan rates capped at 5% to 6%. This means that the interest rate that your loan is charged will never be above the cap. Historically the rates charged have been close to 8% so being capped at 6% is important.
- Interest Bonus – Some policies offer an interest rate bonus after a certain number of years. Some carriers guarantee an additional bonus interest rate on top of what your policy earns each year. Most start in year 11 and can be as much as 1%. Go for the guarantee and make sure that this bonus is paid on all values in the policy. Most companies do not pay this bonus on funds that have been borrowed against. The only carriers that pay the bonus even on the funds borrowed against are North American and Midland National.
- Interest Multipliers – Interest multipliers are game-changers. This new feature adds an additional interest rate bonus of 10% to your policy based on the index growth for the year. The best we have found begins in year 6. Again the company is North American.
- 8 Overloan Protection – The last thing you want to happen to your policy is to lapse while you have a loan against it. At that point, the loans would be taxable to you. Make sure that you choose a carrier that offers an overloan protection rider. All of the carriers listed have one so rest assured that your policy will not lapse due to borrowing too much money.
When you’re looking to get the best indexed universal life insurance policies from the top rated life insurance companies, you’ll need to calculate all of these different factors. They are all going to play a huge role in which IUL is going to work best for you and which company you should purchase your plan through. It’s extremely important that you make the best decision when purchasing life insurance for your family’s protection.
I know this sounds like a lot to think about when selecting an indexed universal life insurance policy, but all are important. There are certainly more areas of importance but these are the biggest to look for. There are a lot of great policies available and we have helped thousands of clients choose the right policy. Let us help you understand all the ins and outs of insurance, don’t just listen to the advice of a big name such as Dave Ramsey or Suze Orman on life insurance advice. We can prepare a personalized indexed universal life proposal for you to review from among the best rated life insurance companies. We just need a few pieces of information from you.
You can give us a call at 1-800-712-8519 or use the quote request form on this page.
If you decide that indexed universal life insurance plans don’t work for you and your family, there are dozens of other life insurance policies that you can choose from. If you’re looking to get the most affordable life insurance coverage for your family, the best option is going to be a term life policy. Make sure you purchase a convertible term life insurance policy so that when your finances improve, you can exchange the term for an indexed UL.
Term life insurance policies are bought with a pre-determined length of effectiveness. After that point, the plans are no longer effective and you’ll have to reapply for coverage. Insurance companies sell these plans in a variety of lengths, everything from two years to thirty years. You can purchase a plan that is going to fit the needs of your family.
Because these plans come with an expiration date, they are going to be the cheapest option for life insurance coverage. If you want to find a plan that is going to save you money on your life insurance option, term life insurance is going to be your best option.
Because there are so many different kinds of life insurance policies, it’s important that you pick the plan that’s going to work best for you and the company you choose is among the best rated life insurance companies. We know that finding the best plan can be a long and difficult process, but we are here to help.
If you have any questions about indexed universal life insurance policies or about some of the other options for you, please contact us. We would be happy to walk you through the process and provide you with your personalized IUL reports.
Companies Offering IUL Insurance Reviews
- North American Company for Life and Health
- Midland National Life Insurance Company
- Minnesota Life Insurance Company
- Symetra Life Insurance Company
- American National or ANICO
- Lincoln Financial Life Insurance Company
- Penn Mutual
- Transamerica Life Insurance Company
- Pacific Life
Our company review list expands as we see better options for indexed universal life insurance become available. We also rank the best guaranteed universal life companies. We also understand that many of our clients just want term life insurance. That is why we also offer all of the best term life insurance companies.
Frequently Asked Questions
What about policy expenses and fees?
When we compare IUL policy expenses and fees that accumulate in an IUL over several decades with traditional retirement products, the IUL falls in line with traditional investments and in some cases they are much lower.
How do I know if a company has the best IUL?
Check these 8 items to determine which carrier works best for you.
1. Index Cap and Floor rate
2. Money Sweep Policy
3. Low policy expenses and fees
4. Accelerated Benefits for chronic, critical, and terminal illness
5. Loan Options
6. Interest Bonuses
7. Interest multipliers
8. Overloan protection
What does Money Sweep mean?
It is very important to have your premium dollars go to work for you as soon as possible. The sweep options are daily, monthly, quarterly and yearly. We prefer daily sweeps so that no matter when you send your premium your money goes to the indexing account