Indexed Universal Life

(NAPSI) Although life insurance has been with us for hundreds of years, Indexed Universal Life is a revolutionary new product quickly becoming extremely popular.

Indexed universal life grows cash values to match a market index. These products offer tax advantages, death benefits, low costs, and easy liquidity.

Only a few companies offered indexed universal life products in 1997.  Nine companies offered the product by 2005, and in the past couple of years the number of providers has ballooned to 46. Sales approached $800 million in 2011 alone, quite a contrast to the $667 million sold over the six-year period from 2000 through 2005.

The reason for such growth? Indexed universal life is perfect for consumers seeking market participation without market loss risks, at a fraction of the cost of similarly tax-preferred accounts, like 401k’s, 403b’s, SEP-IRA, ROTH-IRA and traditional IRA accounts.

See comparison:

Retirement Advantaged Benefits of IUL

Indexed universal life performance is typically linked to a major stock index such as the S&P 500. Generally, these policies include an annual cap on the upside ranging between 10 and 14 percent, and a floor positive credit guarantee should the index drop in value.

“Consumer needs and preferences change, and so do market opportunities,” said David Donhoff of Leverage Planners, a leading provider of indexed universal life since 2001. “Our indexed universal life products are battle tested through all conditions. During two of the worst bear markets in recent history [early 2000s and 2008−09], none of our indexed universal life policyholders lost any accumulated value in their policies because of a declining stock market.”

Through the first three quarters of 2011, the life insurance industry saw modest 5 percent growth, however indexed universal life accounts grew a whopping 38 percent over the same period. The only other life insurance product hitting double-digit sales increase during that time frame was whole life, with a 10 percent jump.

“Relative to other products in the industry, indexed universal life is fairly new,” Littlefield said. “It’s the fastest-growing product in the life insurance business because its cash accumulation features, death benefit protection and flexibility are simply a great fit for many consumers.”