Indexed Universal Life or IUL (Indexed Universal Life) is a flexible insurance policy, but the process is a bit complex and that has led to various myths and misconceptions about it. This resulted in people refraining themselves from choosing this policy.
We will talk about the same myths and misconceptions giving you the truth so that by the end you would know what is Indexed Universal Life Insurance.
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Guaranteed High Returns
One of the common myths is that IUL guarantees high returns whereas the truth is IULs (Indexed Universal Life) might offer, or they have the potential for higher returns, but they do not guarantee it. The returns are subjected to how the selected index performs in the market and the caps as well.
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Suitable for Everyone
People believe that IUL policies are suitable for everyone given their flexibility but that is not the case. It solely depends on the goals and what an individual prefers. For some people other policies might suit better than IUL.
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All IUL Policies Are the Same
It is believed that all IUL policies are the same and that is a big misconception. There are a variety of policies, and they differ in their features like fees, participation rates, and growth.
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No Fees or Charges
Another myth is that IULs do not include any fees and that is completely wrong. IULs charge fees like administrative fees and others. You may also need to incur charges if you decide to withdraw your money.
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Immediate Access to Cash
It is believed that getting access to cash value is immediate. Although, that is not fully true. You can take loans or partial amounts but not the death benefit and overall cash value.
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Tax-Free Investment
Although you do not need to pay taxes on the growth of cash value and even on loans that you take but if you do not manage the loan properly, you may be charged with additional taxes that would result in a loss.
Knowing about the myths and misconceptions is necessary so that while choosing the policy, you are aware of what it offers. This will help you decide if this policy is a good fit for you. You can also contact a consultant to gain more in-depth information about IUL and get assistance in choosing what’s right for you.
FAQs about IUL
Q: Is IUL fit for everyone?
A: No, IUL is not fit for everyone. It depends on your preferences and goals.
Q: Are all IUL policies the same?
A: No, IUL policies differ in their features.
Q: Can I adjust my premiums in IUL?
A: Yes, you enjoy the freedom to change your premiums.
Q: Do I get guaranteed high returns on IUL?
No, high returns are not guaranteed. It depends on market performance and there are caps as well.
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