When choosing a life insurance policy, it's important to understand your options. It's also essential to know how a policy works for you.

When choosing life insurance plans, you have the option of life insurance with a cash value in addition to the death benefit.

One such policy is the indexed universal life insurance permanent life insurance plan. To understand if this is the right type of policy for you, consider its advantages and disadvantages.

Advantages Of Indexed Universal Life Insurance

Indexed universal life insurance is ideal for people looking for a lifelong plan and also want to build cash long-term. Those deciding if this is a good plan can go over some advantages associated with it.

• Interest rates are guaranteed, so policyholders always receive a minimum rate.
• Premium payments are adjustable, and you can use funds to pay premiums.
• Death benefits are flexible
• In emergencies, policyholders have the option to make withdrawals
• Policyholders get life-long life insurance without paying premiums for a lifetime

These features may appeal to you. If so, you can discuss an indexed universal life insurance policy with an insurance agent.

Disadvantages Of Indexed Universal Life Insurance

Indexed universal plans offer potential growth; however, the amount varies based on market values. This means policyholders carry a greater risk than those who choose the standard universal life insurance policies.

There are other disadvantages to consider with an indexed life insurance policy.

• There are no promises for large returns and can't be guaranteed
• Premiums can rise if the measuring index perform below expectations
• Any outstanding loans at the time of death are subject to regular income tax
• Fees and costs vary by the health and age of the policyholder

Keep in mind that indexed universal policies are a good option for those inexperienced in investing. This is because the policyholder doesn't make any of the investment choices.

When selecting any type of life insurance policy, it's critical to research the insurance firm. Some firms have hidden costs or fees to watch out for.

• Fees and commission
• Administrative fees
• Premium expense charges
• Surrender charge
• Insurance costs

These are all additional costs that are sometimes deducted from the premium or from the monthly cash value of the policy. Some fees are also upfront or annual.

It is a good idea to discuss any fees with an insurance agent from a place like Guillory Insurance before signing a policy. An insurance agent can help you decide if an indexed universal policy is best for your needs.