What Is The Difference Between Term And Indexed Universal Life Insurance?
When it comes to life insurance, there are different types of policies to consider. Two common options are term life insurance and indexed universal life insurance. Understanding the differences between the two can help you determine which policy is right for you and your family.
| Term Life Insurance | Indexed Universal Life Insurance |
|---|---|
| Provides coverage for a specific period of time, typically 10, 20, or 30 years | Provides coverage for the life of the policy owner |
| Generally more affordable than permanent policies | Can be more expensive than term policies |
| Policyholders pay premiums for the term of the policy | Policyholders pay premiums for the life of the policy |
| Beneficiaries receive a payment if the policyholder dies before the term ends | Beneficiaries receive a payment when the policyholder dies |
| No cash value or savings component | Includes a savings component that grows over time on a tax-deferred basis |
| Can be converted to a permanent policy or renewed at a higher rate when the term ends | Cannot be converted or renewed |
Term life insurance is a good option for those who want coverage for a specific period of time and are looking for an affordable policy. On the other hand, indexed universal life insurance is a good option for those who want coverage for life and are willing to pay higher premiums for the added benefits of a savings component and potential tax advantages.
Ultimately, the decision of which policy to choose depends on your unique financial situation and personal goals. Consulting with a professional financial advisor can help you determine which policy is right for you.
Our carriers beat Colonial Penn, Globe Life, and AARP 96% of the time*
* Based on website quote requests, through 5/31/23.
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