What Does a One Million Dollar Whole Life or IUL Policy Layout Look Like?

Reviews
1

Hi everyone,

I am exploring options for a $1 million whole life or Indexed Universal Life (IUL) insurance policy and would like to understand what the layout of such a policy typically includes. What should I expect in terms of coverage, premiums, cash value, and benefits?

2 Likes
2

You can check the full comparison of the two policies here below:

Whole Life Insurance

  • Coverage: Provides lifelong coverage with a guaranteed death benefit of $1 million.
  • Premiums: Fixed premiums that do not change over the life of the policy. These can be higher compared to IUL policies.
  • Cash value: Accumulates at a guaranteed rate. The cash value can be borrowed against or withdrawn, offering stable, predictable growth.
  • Benefits: Includes a death benefit, cash value accumulation, and potential dividends if you have a participating policy. Dividends can be used to increase the cash value or reduce premiums.

Indexed Universal Life (IUL) Insurance

  • Coverage: Also provides lifelong coverage with a $1 million death benefit.
  • Premiums: Flexible premiums that can be adjusted based on your financial situation. This flexibility can be advantageous if your income varies.
  • Cash value: Linked to the performance of a stock market index (e.g., S&P 500). This offers the potential for higher returns but also comes with caps and floors to limit gains and losses.
  • Benefits: Includes a death benefit, flexible premiums, and the potential for higher cash value growth. However, it requires more active management due to its connection to market performance.

Remember that both policies have their pros and cons, so it is important to consider your financial goals and risk tolerance when choosing between Whole Life and IUL insurance.

1 Like
3

This person chose a plan to use for five years as an emergency fund and bond alternative in retirement, along with $1M in permanent insurance coverage. Given her tax rate in NY, the 4.8% compounded return is nearly tax-free, which is like earning about 9% from a taxable bond every year until her life expectancy. Despite the current dividend scale being affected by 15 years of low interest rates, it’s likely she’ll earn more than what’s illustrated unless rates drop to zero again for decades. The premium is $36,469/year for five years, with increasing cash value and a steady $1M death benefit.