Indexed Universal Insurance Policy (IUL) vs. Whole Life Insurance Policy An Indexed Universal Life (IUL) is regarded as permanent insurance. An IUL makes provision to offer a death benefit that exists within an investment aspect while being directly connected to the stock market. Keep in mind, however, that the investment aspect is carefully regulated by cap and floor rates that strictly stipulate the gains and losses.

Advantages of an Indexed Universal Life Policy

The IUL insurance policy has many great benefits to consider, some of the main ones include:

  • Tax Advantage – IUL death benefits are distributed tax free to beneficiaries.
  • Zero losses—When the stock market drops, the IUL stays level.
  • Possible High Returns -interest is based on the movement of the stock market.

Difference between IUL and Whole Life Insurance Policy

When Indexed Universal Life is compared with Whole Life Policy, there are some clear differences wrapped up within the core formulation of the life policies.

One of the main distinguishing factors of the Whole Life Insurance Policy is the guarantee of the cash value that grows at a fixed interest rate as opposed to the cap and floor rates for the Indexed Universal Life Policy.

The IUL and Whole Life Policy both share death benefits but on different premises. With the Whole Life Policy, the death benefit is guaranteed and is paid to the beneficiaries regardless of how the investment aspect of the policy performs.

The Whole Life Insurance Policy also guarantees a cash value at a fixed interest rate that removes the fear of instability and uncertainty for policyholders surrounding investments.

Final Thoughts

The IUL and the Whole Life Insurance Policy are intended for individuals in need of lifelong coverage while receiving the benefit of total protection.