EQUITY INDEXED UNIVERSAL LIFE INSURANCE IS DIFFERENT FROM TERM INSURANCE OR MORTGAGE PROTECTION INSURANCE.

Term insurance is pure protection, like car or home insurance. It does not build cash value. If you survive the policy term, you do not get any money back. Because many clients outlive the policy term, the company does not pay death benefits on them and so can charge less for term insurance than for cash value insurance.  

EQUITY INDEXED UNIVERSAL LIFE INSURANCE HAS A TERM COMPONENT.

The term insurance component of equity indexed universal life insurance has a cost, and after that cost is paid, the balance goes to building cash value. The cost of the term component rises as you age, but equity indexed universal life insurance still works for older people.

EQUITY INDEXED UNIVERSAL LIFE INSURANCE HAS A CASH COMPONENT TIED TO AN INDEX.

Premiums not spent on term insurance are invested. Equity indexed universal life insurance is typically indexed to the S&P 500. If the S&P 500 goes up 20%, the value of your cash component rises with it up to a CAP, 12% to 15% to 17% depending on the policy.

EQUITY INDEXED UNIVERSAL LIFE INSURANCE PRODUCES STRONG RETURNS OVER TIME.

If a person had invested in my favorite equity indexed life policy 25 years ago, the average increase in cash value would have been 9.61% per year. If an investor bought stock or mutual funds and held them the right amount of time and sold them at the right time, he could earn more than this, but most people do not have the knowledge and patience to buy the right stocks and pick the right times to buy and sell.

GAINS ARE LOCKED IN.

At the end of the year the gains made for the year are locked in. If the market goes down the next year, the value of your account does not drop.

EQUITY INDEXED UNIVERSAL LIFE INSURANCE HAS A PROTECTIVE FLOOR.

Stocks and mutual funds can go down. When the S&P 500 goes down, my favorite equity indexed universal life insurance products still grows at a 1.0% or 2.0% rate.

EQUITY INDEXED UNIVERSAL LIFE INSURANCE OFFERS STRONG TAX BENEFITS.

Your investment grows tax free, and within generous limits you can take your money out in the form of tax free loans, which are repaid at death. There is no tax on the proceeds paid at death to your beneficiaries.

EQUITY INDEXED UNIVERSAL LIFE INSURANCE CAN FUND AN INCOME STREAM.

At a certain age, low- or no-interest loans can be taken from the cash value each year for the remainder of your life. Depending on the size of the loans, there will still be benefits to pay to beneficiaries at your death.

EQUITY INDEXED UNIVERSAL LIFE INSURANCE CAN BE PURCHASED FOR CHILDREN

Parents can put $50 to $80 per month into a policy for their child. This can fund the down payment on the child’s first home and their retirement. When the child is mature, the child takes over the policy.

PREMIUMS CAN BE ADJUSTED UP OR DOWN.

A client must pay a minimum amount to keep the term insurance paid and fund the costs of the policy or it will lapse. There is a maximum amount the client may contribute or the insurance policy will convert into a “modified endowment contract” and will be taxed as an annuity.

INTEREST CREDITING OPTIONS CAN BE MODIFIED.

Each quarter the Client may change from the S&P 500 index to some other index. If the Client perceives that the market will go down, the Client can switch to a fixed interest rate, which is set each quarter and which typically earns around 4.0%.

EXAMPLE: 40-YEAR OLD MALE CONTRIBUTING $5,000 PER YEAR:

Our Client will contribute $416.67 per month for 30 years, a total of $150,000. The policy face amount would be $303,000. Assuming average S&P 500 returns of 9.61%, he will have an account value of $595,000 at age 70. At that age he can start taking out $55,600 per year as loans and can do that for 30 years.

EXAMPLE: 25-YEAR OLD MALE CONTRIBUTING $1,800 PER YEAR:

Our Client will contribute $150 per month for 40 years, a total of $72,000. The policy face amount would be $198,000. Assuming average S&P 500 returns of 9.61%, he will have an account value of $618,000 at age 65. At that age he can start taking out $56,500 per year as loans and could do that for 35.

EXAMPLE: PARENTS OR GRANDPARENTS BUY POLICY FOR 5-YEAR OLD GIRL:

Wise parents or grandparents buy a equity indexed universal life insurance policy for their 5 year old girl and pay $81 per month into it. The policy amount is $250,000. When she is mature the girl takes over control of the policy and keeps paying. By age 50 her account value is $474,000, by age 60 it is $1.23 million, and so on. They can spend as little as $30 per month and create a significant legacy for a child.

EXAMPLE: 50-YEAR OLD INVESTS $200,000 DRAWN FROM HOME EQUITY