Indexed Universal Life (IUL) policies provide death benefits while linking cash value growth to an index's performance, allowing for tax-deferred gains. However, they typically involve high fees and commissions, making them expensive relative to other investment options. Critics argue that the combination of life insurance and investment may dilute the potential returns due to fees. As a result, it's crucial for potential investors to assess the total costs versus the potential benefits before purchasing an IUL policy, especially when considering long-term financial goals like retirement or education savings.
IUL policies combine life insurance with an investment component, linking cash value to market index performance, offering tax-deferred growth and potentially better returns.
I'm generally not a fan of universal life insurance policies because they're expensive and they lock you in, hitting you with double the fees.
The typical commission on IULs can reach up to 90% of the first year's premium, which raises questions about the underlying motivations of the advisor.
The combination of life insurance and investments can be appealing, but it's essential to consider actual costs versus the promised benefits before committing.
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