07 Sep Indexed Universal Life Insurance: Historical Credited Returns
Indexed Universal Life Insurance: Historical Credited Returns
Expense Structure – IUL
Indexed Universal Life Insurance (IUL) has gained popularity in recent years due to its unique blend of life insurance protection and potential for cash value accumulation. One of the key features that make IUL attractive to many investors is its ability to earn interest based on the performance of underlying market indices, such as the S&P 500, while also providing downside protection. Let’s delve into the benefits of IUL by examining historical credited returns from various market indices.
Yearly Performance Overview:
Here’s a snapshot of hypothetical credited returns based on the performance of three prominent market indices – S&P, Bloomberg, and Pimco – over the past decade:
|
Year |
S&P |
Bloomberg |
Pimco |
Average Annual Return |
|
2022 |
0.00% |
0.00% |
0.00% |
0.00% |
|
2021 |
12.50% |
9.38% |
16.98% |
12.95% |
|
2020 |
12.50% |
8.67% |
7.72% |
9.63% |
|
2019 |
12.50% |
25.02% |
19.67% |
19.06% |
|
2018 |
0.00% |
0.00% |
0.00% |
0.00% |
|
2017 |
12.50% |
28.73% |
27.48% |
22.90% |
|
2016 |
9.54% |
9.61% |
10.93% |
10.03% |
|
2015 |
0.00% |
0.00% |
0.00% |
0.00% |
|
2014 |
11.39% |
13.43% |
2.91% |
9.24% |
|
2013 |
12.50% |
15.62% |
14.72% |
14.28% |
Average Annual Return:
When we analyze the average annual return across these indices over the specified period, we find:
- S&P: 8.34%
- Bloomberg: 11.05%
- Pimco: 10.04%
- Overall Average: 9.81%
Benefits of IUL:
- Market Participation with Downside Protection: Indexed Universal Life Insurance allows policyholders to participate in the potential gains of the stock market through indexed interest crediting while safeguarding against market downturns with a guaranteed minimum interest rate.
- Tax-Advantaged Growth: Similar to other permanent life insurance policies, cash value growth within an IUL policy accumulates tax-deferred. This means policyholders can potentially grow their savings faster compared to taxable investment accounts.
- Flexibility and Control: IUL policies offer flexibility in premium payments and death benefit options, allowing policyholders to adjust their coverage and savings goals as their financial needs change over time.
- Legacy and Retirement Planning: IUL can serve as a valuable tool for legacy planning, providing a tax-free death benefit to beneficiaries. Additionally, accumulated cash value can be accessed during retirement to supplement income or cover expenses.
- Stable Returns: While IUL’s performance is tied to market indices, the downside protection feature ensures that policyholders do not experience negative returns during market downturns, providing a level of stability and predictability.
In conclusion, the historical performance of market indices underscores the potential benefits of Indexed Universal Life Insurance (IUL) as a powerful financial tool. With its unique blend of market participation and downside protection, IUL offers stability and growth opportunities for policyholders. If you’re seeking to secure your family’s financial future while maximizing growth potential, consider exploring The Policy Shop‘s WealthX IUL. With expert guidance and innovative solutions, The Policy Shop can help you unlock the full potential of IUL to achieve your long-term financial goals.
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