Whole Life and Index Universal Life

Whole Life Insurance and Indexed Universal Life: Brief Comparison

When you buy permanent life insurance, you have a few options. Two popular choices are whole life insurance and indexed universal life (IUL). Understanding the key differences can help you choose the best option for you and your family. These two options are the same in that whole life and IUL both offer the potential for building cash values and securing lifelong coverage, but they are different in that premium payments and cash values work differently.

Whole Life Insurance

What it is: Whole life insurance offers permanent coverage—across the life span of the policyholder. For individuals wanting to provide for their families after death, it is generally considered among the most reliable and stable of these types of policies.

The Key Features:

• Cash value growth can be based on dividends which may be used for specific goals, like retirement or college funds.
• The policy values grow tax-deferred, and premiums usually don’t increase as you age.
• It can be an effective way to leave a legacy for your family or dependents.

Indexed Universal Life (IUL)

What it is: An IUL is a type of universal life policy which, like whole life, is permanent and provides a death benefit. The universal part means premiums are flexible, and the components (such as death benefits, index crediting options, and premiums) can be altered by the policyholder throughout the life of the policy.

The Key Features:

• The cash value* is based on the performance of a specified market index, and may grow tax-deferred.
• Since the policy is not directly invested in the market, IULs have downside protection with the opportunity to receive competitive interest rates.
• Even in a down market, cash value* is often protected by a minimum 0% crediting floor.

Both of these permanent life policies have potential built-in cash value*. If you need or want to stop paying premiums, you can use your available cash value* to continue your current insurance protection. If the amount of premiums paid or the cash value* of the policy is not sufficient to pay your policy charges, the policy will lapse, and there will no longer be a policy in force or death benefit. 

Do you want predictability or flexibility?  It's important to evaluate your long-term goals, current and future expenses, and desire for security. We can run illustrations with each carrier to help you decide which type of policy may be right for you.