Universal Life Insurance

Guaranteed Universal Life (GUL) is ideal for those who have a need for guaranteed permanent life insurance (much like whole life) but without the need of cash value growth. This policy finds a middle ground between term life and whole life policies. While term policies can offer a sizable death benefit for a relatively low cost and whole life offers guaranteed life-long protection at an increased cost with cash value accumulation; guaranteed universal life offers life-long protection at a lower cost than whole life. The trade-off being there is no cash value accumulation. 

Indexed Universal Life (IUL) is ideal for those interested in death protection but are more concerned with cash value accumulation potential for needs such as additional retirement income. IUL's are an advanced and complicated insurance product that is difficult to fully explain. The cash value in IUL's grow tax-deferred based on strategies of your choosing that are tied to changes in a market index such as the NASDAQ or S&P 500. I'm sure you're wondering what does that mean for me? In layman's terms - when you pay a premium to the insurance company, a portion of your premium payment goes toward paying for the life insurance, and a portion of your premium is added to an account that earns interest related to the performance of an index, hence the name indexed universal life. For example, if the S&P 500 sees a 6% monthly gain, your cash value is multiplied by 6%. Conversely, if the index sees a negative return, then no money is added to your cash value. It is important to note that the cash value does not directly participate in the stock market and as such IUL's are not considered investment securities. As with most aspects of life, there are trade-offs to be considered, and IUL's are no different. Most companies have something called a "participation rate". This is a limit on the amount of interest that can be credited towards your cash value account, every insurance company has a different cap. 

Advantages of IUL's:

• Lower cost than whole life
• More significant cash value accumulation compared to whole life
• The flexibility to increase/decrease the death benefit
• The flexibility to increase/decrease premium contributions
• Less risk compared to variable universal life
• Cash value is accessible at anytime*
• Unlimited contribution amount - there are no caps on yearly contributions to an IUL
• Cash value grows tax-deferred

Disadvantages of IUL's: 

• Caps on participation - your cash value will not see 100% of the gains of the index it is tied to
• Based on an index - your account receives no interest if the index goes negative 
• Requires large face amount - IUL's are better suited for large death benefits due to IRS regulations

*Withdrawing cash value decrease death benefit amount

Variable Universal Life (VUL) is much like an IUL.  You have a death benefit and a subaccount that allows for cash value accumulation. The key difference is that a VUL's subaccount is directly exposed to market fluctuations, you can see substantial gains and/or losses depending on the volatility of the market.  Think of the subaccount like a mutual fund, you decide how your cash is allocated between stocks and bonds. Also much like IUL's, VUL's have a maximum cap and a floor, which vary from each insurance company. Variable policies are classified as investment securities.*

*We do not offer variable universal life policies at this time.