There's a relatively new animal in the jungle and it is called 'Equity Indexed Universal Life.'
It offers the consumer solid death benefit guarantees plus the potential for higher earnings because the cash value growth can be indexed to indicies such as the Standard & Poor's 500, NASDAQ, FTSE or DAC.
How it Compares
Like traditional Fixed Universal and Variable Universal Life, it is a flexible premium contract. However, it differs in the following ways:
How it Works
The premiums you place into the contract (less insurance expenses) earn interest based on a stated participation rate against, for example, the return the Standard & Poor's 500 Index.
The participation rates are declared annually or for the full term of your plan. At the anniversary of your policy, the insurance company will multiply the participation rate by the percentage increase in the S&P 500 over that same period and credit your account accordingly.
If the S&P 500 was flat or declined over any said period, most carriers will credit a minimum return - usually 1-3%.
Index Crediting Methods
There are four commonly used indexing methods. Your gains depend entirely on the method used.
Each method has certain advantages and disadvantages, depending on how you view the movement of the stock market over any given period of time.
Good Idea - Right Time
Regardless of the type of policy and indexing method you choose, the product and its link to a broad, stock market index is potentially a solid long-term insurance investing strategy.
There are virtually no management responsibilities and there's a very good possibility that over time, you'll potentially earn greater returns than traditional fixed insurance policies.
Lastly, it should be noted that this product is best suited for insured's/owners who are between the ages of 0 and 55.
Action To Take
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Fielder Financial Management, LTD.
All Rights Reserved.
Securities offered through Fortune Financial Services, Inc. member FINRA, SIPC. Fielder Financial Management, Ltd. not affiliated with Fortune Financial Services, Inc. Mark Fielder, Financial Professional, CA. Insurance Lic. # 0690576.