Disadvantages of Indexed Universal Life Insurance from Alina Mark's blog

Life insurance with an investing component is known as "indexed universal life insurance." The cash value has an indirect market exposure, which means there is some downside risk as the returns are dependent on the market. On the other hand, these policies can be quite difficult to understand. Also, they are more expensive than other life insurance policies. With the above-mentioned disadvantages, you might be changing your mind. If not, here are some more disadvantages of indexed universal life.

●       Uncertain market

Nobody can predict the stock market. As these insurance policies are connected with the market, they also possess market risk. Indexed universal life insurance is completely dependent on market performance. Therefore, you might get good returns or you might lose some of your money.

●       Restricted returns

To restrict the returns, a cap is often applied. A cap is the highest amount of earnings that can be reported to your account. For instance, if the policy has an 8.5 percent cap and the market gains 11.1 percent, you will not get more than 8.5 percent. So, you cannot earn more than the cap, but at the same time, the same money invested in the market directly can give you 11% returns.

●       Spreads

Before gains are allocated to your account, these features deduct a part of any favorable index changes. Assume that the indexed account is solely subject to a spread and that the spread is 25%. If the index rises by 8%, 2% (or 25% of 8%) would be subtracted before being added to the cash value. In this situation, the monetary value would be credited with 6%. Thus, your returns are subtracted again and again.

As we have mentioned earlier, indexing universal life is a complex concept and cannot be done without the legal help of an advisor. Therefore, you can get legal advice by visiting life-benefits.com. Not only that, but you can learn more about Wealth Beyond Wall Streetand everything related to it for free on life-benefits.com.