There is a lot of confusion surrounding indexed universal life insurance (IUL). From claims that it's a "get-rich-quick" scheme to accusations of hidden fees, there are plenty of misconceptions out there about IUL.
This post is here to set the record straight and debunk some common myths about IUL.
Myth 1: Making Money With IUL is Just too Good to Be True
The most common myth surrounding IUL is that it's too good to be true. People often think that if you can make money from an investment product and it also provides death benefit protection, then something must be wrong.
However, this isn't necessarily true. With IUL, you have the potential for cash value growth based on market index performance, which can give you access to more money in retirement than other investment products. That said, making money with IUL isn't guaranteed — just like any other type of investment, it comes with risk and requires research before investing.
Myth 2: You Can't Access Your Money Until You Die
Some people believe they cannot access their cash value until they die or until they surrender the policy. This simply isn't true. While surrendering your policy isn't recommended due to tax implications and potential loss of benefits or coverage, there are other ways to access your cash value if needed, such as taking out loans or withdrawals.
Keep in mind, though, that taking loans or withdrawals may reduce the death benefit or cause the policy to lapse depending on how large your loan or withdrawal is relative to your policy's premium payments and performance. This is why reviewing your policy before using any type of cash-value access is important.
Myth 3: Your Premiums Will Increase Over Time
Another misconception about IUL is that your premiums will increase over time — this simply isn't true either. In fact, many policies offer fixed premiums for life, so you will never have to worry about paying more than what you originally agreed upon when purchasing the policy.
Additionally, many policies offer additional riders for an additional cost, such as long-term care riders. These riders help you customize your policy and provide more coverage, but they won't increase the premium payments for the life of the policy. But they are entirely optional, so you don't have to purchase them if you don't want them.
Indexed universal life insurance allows policyholders to potentially earn more money than other products while still providing death benefit protection. And contrary to popular belief — it doesn't come with a slew of hidden fees or require policyholders to wait until they die before accessing their funds.
Understanding these three common myths about IUL can help make sure that anyone considering an indexed universal life insurance product knows exactly what they're getting into before signing up.Share