Life Insurance Types Term vs. Permanent Universal

Indexed Universal Life Insurance

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How is it different from standard universal life insurance?

Indexed universal life insurance distinguishes itself in the way its cash value grows: the cash value experiences a rate of interest that follows a standard market index.  For instance, if your policy's cash value follows the Dow Jones U.S. Oil & Gas Index, then your interest rate will increase when the value of oil and natural gas increases.

There are two main types of cash value life insurance: whole and universal life insurance.  With whole life insurance, the interest rate is fixed and guaranteed; but with universal, it's subject to change at any time.

With ordinary universal life insurance, the interest rate is set by the insurance company that issued your policy.  The interest rate they give their universal policyholders reflects the amount the company can afford to pay (but universal policies should include a guaranteed minimum, below which your cash value's interest rate will never fall).

With indexed universal life insurance, the interest rate is subject to change, but changes are not in the hands of your insurer.  Your insurer may provide you a choice of certain market indices to which to bind your interest rate.  (You can still expect a guaranteed minimum rate of interest, however.)

What's universal life insurance?

Universal life insurance is the flexible variety of permanent life insurance.  It's cheaper than whole life insurance because it transfers responsibility to the policy holder and dispenses with the fixed, guaranteed rate of cash value growth.  You pay premiums of whatever amount you want, as often as you want.

A few of the carriers we quote

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