By Joe R. Maldonado
It would be advisable to learn about the equity index universal life insurance pros and cons before coming to any sort of decision about a purchase. With equity index universal life insurance (EIUL) there is usually a very high percentage of the premium that gets invested in traditional fixed income securities. The remainder (usually about 10-20 percent) gets linked to a specific stock index. Every time the market goes up a previously set percentage of gains gets credited to your policy. Even if the market falls you still get the minimum guaranteed rate.
If you are weary of the equities market, but you wish to purchase a variable insurance policy, you should seriously consider equity indexed universal life insurance. Should you decide to go with this option you will then have a chance to get some high returns, but you don’t have to risk what you invested.
With equity indexed universal life insurance, if your financial situation happens to change you can adjust your benefits as well as your premium accordingly. You can match your assets to the fluctuations of the index as well. Most of the time you can get a guarantee from the company that your credit rating will not fall below zero, no matter what happens with the market index. However, they can also put a cap on how much increase there can be on the cash value in the event that the index rises.
Equity indexed universal life insurance can potentially credit up to 18 percent or possibly more, whereas traditional universal life plans will generally only provide below six percent. Most policyholders appreciate the level of participation they can have in the market with their equity index universal life policy.
Even though equity indexed universal life insurance is a fairly new type of insurance, this should not deter you from wanting to try it. There is no one policy that is going to be right for everyone, and of course equity indexed universal life insurance has its pros and cons. However, it does have a sort of following in the industry. You should look into equity indexed universal life insurance enough to determine if this option may suit your individual needs, or if there may be something else out there that would fit your family a little better. There is a lot of information available about it now, since it is rising in popularity.
On the plus side, this is a pretty straightforward type of policy. You make interest on your account which is then invested into a predetermined index. If all goes well, you will be fine. If things get tough, you shouldn’t worry too much. This just comes with the territory when you are working with indexed variable universal life insurance.
The best advantage is that most companies give you a guarantee that you will never suffer a monetary loss. However, there will be an earnings cap, so your ability to make money is slightly hindered.
Just try to consider the complete list of equity indexed universal life insurance pros and cons, and make your best educated decision as to whether this will be your best option!
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