Protection Indexed Universal Life Insurance Policies
Protection indexed universal life insurance policy can help a policyholder to adjust life insurance policy while experiencing the opportunity to increase cash value. In other words, the policyholder will be able to determine the percentage of cash value to be assigned to an equity-indexed account or a fixed indexed account. The protection indexed insurance policies would offer some of the well-known indexes, including the Nasdaq-100 and S&P-500. This kind of life insurance policy would deliver cash accumulation, along with a death benefit to the policyholder.
Ever wondered what an Indexed Universal Life policy is? You need to be familiar with that somewhat queer term before reaching out for benefits. Well, Indexed Universal Life policy is a special type of universal life policy. You must have heard enough of life policies, but not with that ‘universal’ affixed.
A normal life policy becomes special when it is universal. In layman’s terms, a universal life policy offers you flexible premium schemes coupled with special features of a normal life insurance policy. You can adjust these special features such as savings option and death benefit in the contract. Between life insurance and universal life insurance policy, you will come across a number of differences. The major change, however, is that the universal life policy is much more flexible than the average life policy.
And that leads to many more benefits.
Still tough to grasp it.
Well, imagine you have invested an amount to the tune of US$10,000 as a mutual fund. That is subject to a five percent tax growth. The profit of your mutual fund also paves the way to US$ 26,533, which is known as capital gains. You will also get US$ 3978 as a result of 15 percent tax rate. Finally, you have a tripled-combination profit for your original fund.
Grow up by delaying taxes.
In finance speak this is identified as account value on tax-deferred basis. Under this scheme, you can enjoy the benefits of combination. As a policyholder, you are entitled to interest on principal, interest on interest and interest on money – a triple combination. All this is the money you earn, which otherwise would have been disappeared for the sake of tax.
Good news for your inheritor
You do not have to pay an income or death tax on the indexed universal life policy. Your hard earned money will be directly channeled to the inheritors you name. This is quite special, as most other retirement policies do not offer this. Even if they offer you such a facility, that will be subject to a tax. For instance, if you have an estate, you will have to pay a huge tax based on the value of your asset. The Indexed Universal Life policy does not plague you with such taxes.
What you deposit as an indexed universal life policy is open for you to access at any stage of your life – regardless of your age. However, that is not without condition. For instance, if you withdraw money before you reach 60, there is a penalty fee of 10 percent as well as the usual tax imposed on the income. However, you can opt for a loan and avoid penalty and policy tax.
More than any other life policy, the Indexed Universal Life policy is quite easy to handle with more options. If you really need a good investment plan following the retirement, Indexed Universal life policy offers you quite a lot of benefits. Easy management comes in handy for any busy executive.