Thinking of “Juicing” Your Life Insurance? Read This First
Last week The Wall Street Journal ran an article called “Juicing Your Life Insurance” about “indexed” universal life insurance policies. A first read of the article might lead a consumer to decide, Wow are these things complicated! I couldn’t agree more. However, the life insurance industry developed these policies to respond to two main critiques that other types of permanent insurance are often tagged with.
With whole life insurance some consumers say, “I like the guarantee, but can’t I earn a bit more of return when the market is really up?” With variable life insurance, consumers sometime say, “I love the upside when the market skyrockets, but I can’t stand the wild market swings.” So, like any good listener, many insurance companies developed this so-called indexed life insurance product, which allows you upside participation and downside protection. The bottom line: you are able to participate in market gains, while ensuring that you don’t lose those gains should the market go south.
It is confusing … you bet. Wise consumers will consider all the options available, get good counsel from their insurance advisor and then make an informed decision. I personally own all five major types of life insurance: term, universal, whole, variable and indexed. The way I see it, the mix is diversification itself. That mix is unique to my personal and business needs, so everyone should make a decision based on their personal circumstances. Research and understanding is the key to long-term success with indexed life products. For many, the product provides a much-needed combination of upside and downside participation. It’s not for everybody, but it might be for you. Talk to your advisor to find out more.