Whole Life Insurance and Indexed Universal Life Insurance: Comparing the Features

If you’ve ever considered life insurance policies, you know that there are a variety of options to choose. The various life insurance policies offer a range of features. But in the end, making the right decision will be largely based on your specific needs. Here, we’ll provide a comparative look at two of the most common permanent life insurance options, whole life insurance and indexed universal life insurance, to aid in your decision-making process.

Whole Life Insurance

What it is: Whole life insurance offers permanent coverage—meaning across the life span of the policyholder. For individuals seeking to provide for their families after death, it is generally considered among the most stable and reliable of these types of policies.

Key Features:

• Designed to provide coverage for a lifetime.
• Your policy values grow tax-deferred, and premiums usually don’t increase as you age.
• It can be an effective option for those individuals needing to provide for dependents after their death, regardless of when they pass.

Indexed Universal Life Insurance (IUL)

What it is: An IUL is a type of universal life policy that, like whole life, is permanent and provides a death benefit. The universal part means that premiums are flexible, and the components (such as a death benefit, index crediting options and premium) can be altered by the policyholder throughout the life of the policy.

Key Features:

• The policy offers a cash value* that may grow tax-deferred.
• As the policy is not directly invested in the market, IULs help provide downside protection while still providing an opportunity to receive competitive interest rates.
• Even in a down market, the cash value* is often protected by a minimum zero-percent crediting floor (meaning your index credit can’t go lower than zero based on negative market index returns).

Both permanent life policies featured here have a built-in cash value*. If you need or want to stop paying premiums, you can use the available cash value* to continue your current insurance protection. If the amount of premiums paid or the cash value* of the policy is not sufficient to pay the policy charges, the policy will lapse, and there will no longer be a policy in force or death benefit.

To explore the options offered be sure to contact a local agent/producer. An agent/producer can help you pick the option that best suits your and your family’s needs.