We discussed whole life vs. Indexed Universal Life in a previous post, and now we will address indexed universal life insurance cost, also known as IUL.
As a consumer, you know that one of the most important aspects is the cost. So even though there are other significant variables in an IUL, the cost is on top of that list.
First, we need to consider two simple questions for anyone looking for Index Universal Life:
- How much does IUL cost?
- How much coverage do I need?
In reality, these two questions will help determine what direction you should take when buying the right IUL policy.
Let’s go over some of the important considerations. By the end of this article you will also know how to open an IUL.
2023 Indexed Universal Life Update (IUL)
One of the many benefits of indexed universal life was demonstrated by the end of last year. Downside protection is one of the key features of indexed products. Where the S&P had a mid-teen percentage drop in 2022, IUL products with a 0% floor kept policyholders comfortably sleeping at night.
For 2023, Indexed Universal Life (IUL) products will get even better. For individuals and families looking for the safety of an insurance product with real upside potential it is vital to have clear illustrations. Regulators in 2023 are looking to update several guidelines to create a more transparent representation of IUL products. The National Association of Insurance Commissioners is in process of updating Actuarial Guideline 49 which was originally passed in 2015. These updates are all about helping consumers understand what they are buying and what the insurance companies are selling.
Let our experts at Top Whole Life help you navigate Indexed Universal Life Insurance and build the right IUL policy for you and your family.
IUL Fees and Costs
IUL cost is comprised of several embedded fees within the policy. The typical IUL fee structure includes a Premium Expense Charge, Cost of Insurance, Expense Charge, and Rider Cost of Insurance (to name a few). Usually, the higher the IUL fees and costs, the higher the commission for the agent. It is extremely important when structuring an IUL insurance policy to minimize the costs and charges as much as possible to create the best performing product for the client. At Top Whole Life, you will work with one of our insurance industry veterans to be assured that your policy is focused on maximizing returns. Call us now or use our instant quote form to start the life insurance purchase proces.
Factors that Impact Your Cost
There are no deals or discounts on life insurance. However, you can pick the right company for your situation.
Every company has different standards on who they want as a client. So it is the job of your life insurance broker to know who to pick on your behalf.
Here are the factors that affect your Indexed Universal life insurance premium:
- Age – Like any life insurance, rates are cheaper when you are young. The older you get, the more you will pay.
- Health – health plays a significant part in cost. The healthier you are, the cheaper the policy.
- Smoking – Are you a smoker? Tobacco rates will significantly increase your cost.
- Sex – Women have much lower rates than men. Statistically, they live longer than men.
- Exam/no exam – Some companies offer no exam indexed universal life insurance. If you do not want to do a medical exam, you will pay a higher premium.
- Insurance Company – The company you pick. As we already mentioned, each company has different standards and ratings.
- Policy Details – The details of each policy: Caps, Floors, Participation Rate & Indexing Method.
Since so many factors impact your cost, including the company and your overall personal and health profile, you won’t know how much you’ll be asked to pay until you receive quotes from multiple providers.
How does cash value grows in an indexed UL policy?
Cash value in an indexed UL policy grows according to the performance of an underlying stock market index, such as the S&P 500. The amount of growth depends on how the index performs.
Generally, the cash value of the policy will increase when the index increases in value, and decrease when the index decreases in value. In some cases, a cap or floor may be applied to limit the growth or decline of the cash value.
You may not be familiar with caps and floors. Caps and floors are limits that are applied to the cash value of an indexed UL policy.
A cap is a limit on the amount of growth that the cash value can experience as a result of the performance of the underlying index.
A floor is a limit on the amount of decline that the cash value can experience as a result of the performance of the underlying index. The caps and floors are set by the insurance company when the policy is issued and can be adjusted over time.
Average Indexed Universal Life Insurance Cost
We are going to give you some average indexed life insurance costs for different ages next. However, the purpose of the charts is to give you an idea of the price ranges, not to be a quote.
Please remember all of the prices can change based on all of the factors we already mentioned. For our charts we use an A rated company with good pricing and product.
IUL $250,000 cost, excellent health & non-smoker
|Age||Monthly Price||Cash Value @ 65|
|Age||Monthly Price||Cash Value @ 65|
As you can see in the previous tables, there is a significant increase in price if you wait a few years. Also, as you have less time to accumulate cash, the cash value is lower. So if you are considering an IUL, you shouldn’t wait as the most significant factor for cost is age.
The reason that we created the table is that we get the question very often:
How much does Indexed Universal Life insurance cost?
Most of the time, the answer to the question is: It Depends…
However, we wanted you to have a starting point to understand the cost. Before you purchase, there are still many factors to consider, but now you have a base.
If you would like to get a whole life insurance quote, use our whole life insurance quoter:
Indexed Universal Life Non-Medical Cost
Some of our clients do not want to do a medical exam. So they opt for a non-medical IUL. We will show you a few examples of IUL’s without Medical exam:
- Simplified Issue
- Guaranteed Issue
In non-medical life insurance, you will not have to do a blood and urine test. The insurance company will still look into your medical history if it’s necessary. However, their rating will be based on answering a few health questions.
You will end up paying a little more than if you took the medical option.
Who Should Do It?
If your health is average and not in excellent shape, it may be a good option for you. In addition, if you haven’t been to the doctor in a while, it may be better to go the non-medical route.
Cost Of Non Medical IUL
As we did previously here is a table for your reference. This is not an exact quote but it will help you get an idea:
Male $250,000 Non Medical IUL Cost
|Age||Monthly Premium:||Cash Value @ 65:|
Female $250,000 Non-Medical IUL Cost
|Age||Monthly Premium:||Cash Value @ 65:|
A non-medical IUL is a great product that can work for many clients. If you would like a quote go here:
Price Is Not Everything
Unlike term insurance, IUL is an asset with many moving parts. There are many variables you need to consider like:
- Cap Rate
- Participating Rate
- Indexing Method
These variables can turn a cheap IUL into a bad long-term investment. But, so many times, paying a bit more will get you significant cash value growth over the long run. It is not easy to compare all these variables; that’s why our agents can help you get the best quote.
In addition, you should consider overfunding an IUL to get more cash value growth.
How To Open And IUL Account
In reality, it is really simple. Our agents can help you open an IUL account.
Remember , IUL is life insurance, so you do need to go through the process of getting approved.
That means the agent will help you schedule a medical exam (unless you pick a non-medical IUL), and go through underwriting.
Once the medical has been approved then you will be able to fund you IUL account. You will pay premiums, but you can decide to contribute more money if you want.
You should have a better idea of IUL prices, as you can see rates go up significantly as you age. So make sure you lock in your rates as soon as possible.
However, as we mentioned, price is not the whole story, so make sure you request a quote from multiple companies from an expert.
If you want an Indexed Life Insurance online quote from our experts, go here: Give Me An IUL Quote
You may want to go over our article: Whole Life Insurance Cost
Frequently Asked Questions
What makes indexed universal life insurance so unique?
The indexed part makes it unique. You have upside potential on an index like the S&P 500. But also it means that the policy comes with a minimum guaranteed rate of interest so that you won’t lose your money. These rates of interest aren’t fixed instead, these are based on an index chosen by the insurer.
What is the difference between term life insurance and indexed life insurance?
A term life insurance is more affordable and offers financial peace of mind. You don’t need to worry about the rate of interest, cash values, indexes, etc.
On the other hand, an indexed universal life insurance policy is similar to a whole life insurance. It has a cash value component that acts as a saving medium at a return rate set by the performance of an index.
What is a no-lapse guarantee?
A no-lapse guarantee ensures that your policy will remain in force even if the cash value drops to zero.
What are the benefits of indexed universal life insurance?
Here are some of the benefits:
- Your interest rate is based on a market index chosen by the insurer instead of having a fixed interest rate.
- You can use your cash value account money to pay your premiums.
- Guarantee minimum interest rate is paid even if the index produces lower returns.
- You can adjust death benefits at any time.
- You can make limited withdrawals from the cash-value account. However, it will reduce the death benefit.
I have a USAA UL policy issued in 1982. The guaranteed interest rate is 4.5 %. I have overfunded this policy almost from inception. Could y evaluate this policy and provide recommendations for going forward.
It would be our pleasure! Could you please email us your annual policy statement (if you have it) at email@example.com? If don’t have it, just email us what you know and we will take it from there.