Annuities vs (IUL) Indexed Universal Life Insurance


People who are making retirement plans, especially those who are close to retirement, may wonder if a life insurance policy will provide any benefits that are worth the cost.

As with any financial decision you have to consider, you must always consider the benefits and the cost. You may already have a policy, but do not know if you should keep it or not. You may not be covered yet, but wonder if you should start shopping for coverage.

Benefits vs. Cost vs Need of Retirement Life Insurance

First think about the benefits you want to gain from a policy. Most people purchase coverage on their lives because they want to provide cash to their families to replace their own income. You may be worried about how your spouse, children, or grandchildren will provide for themselves after you are gone.

Will they need the extra cash? If your spouse already has a comfortable income from retirement savings, social security, or a pension, he or she may not really need the money that much. If your spouse will suffer from a large cut in income after you are gone, you may want to consider helping him or her make up the gap with the proceeds from an insurance policy.

There are also other reasons to purchase life policies. Some want to endow foundations, social causes, or charities. Others want to protect a business asset that would suffer without their management. Still other people just want to make sure that the family has enough cash to pay for a nice funeral. You must figure out what good a policy will do the people you behind when you pass away.

How Much Coverage Do You Need? After you have figured out why you think a policy would help you, it is time to figure out how much coverage you would need. Life insurance could pay off a house, buy out a business, reduce debts, or provide income. Try to figure out how much money your beneficiaries would need to make themselves comfortable after you have gone.

Are There Alternatives to Life Insurance? Keep in mind that your policy will come with a cost. You may have to make monthly premium payments. You may just fund it with a lump sum of money. Either way, you need to decide if a policy would be the best way to solve your problem.

Which Kind Of Policy Should You Buy? You will have to decide if you want term, whole, universal, or variable life. Consider the pros and cons of each kind of life policy. A term policy may be much cheaper, for example. But it will expire after the term, and you may want a policy that will not expire.

How Much Does Life Insurance Cost? As you probably already know, the cost will depend upon your age, health, zip code, the type of policy, and how much coverage you need. Beyond that, different insurers have different rate charts. It is important to shop around for the best deal from a top company.

Online life insurance quote forms and good insurance agents are great resources to help you compare costs and benefits.

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What are the differences between a hybrid index annuity and an (IUL) index universal life policy? Wow! Steve, we thought we were about the only ones who ever discussed this. Great question! The answer can typically be found by beginning with the end objective. In other words, what is the end goal for these dollars and when do you need them? Be aware that:
a) Cap rates on IUL policies are about 3 to 5 times higher than those on index annuities;
b) There are IUL policies which allow you to add a rider that will guarantee lifetime income;
c) IUL policies if configured properly can generate a tax-free income stream;
d) An IUL may NOT be the right choice for your guaranteed lifetime incomeā€¦
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Disclosure: Videos are educational and conceptual only and not a solicitation. They are not to be considered investment, insurance, tax or legal advice. It is recommended that you work with licensed professionals for individualized advice before making any important financial decisions. Annuities are not FDIC insured and their guarantees are based on the claims paying ability of the issuing insurance company. State Guarantee Associations, while offering specific protections, are not the same as FDIC insurance. Read more Annuity Guys disclosure at: