How does EIUL Actually Work – PART 2

By | April 10, 2011

Equity index universal life insurance provides its clients maintain their premiums and profits adjustable and modifiable in relation to the activity of the local stock markets. If you are looking for a tax free retirement and want to invest the pensions, salaries and insurance tax free, then you should buy the policies of EIUL. Your cash value of the invested amount is fixed with the financial index of the permanent life insurance policy. The policy will give you a definite amount of profits and account rate. You can enjoy the benefits of indexed investment and universal life insurance by combining the effects of these two benefits.  Most of the companies use the policy of S &P500 for the discussed index.

The policies of EIUL make a protective and strong base for the annual profit payments, so your money is saved and will never face loss. If the index is giving extraordinary performance then the clients can not enjoy the extra benefits that are not present in the policy paper.

There are many risks present with the policies of EIUL that the customers purchase due to flexibility. An increase of 4-6 percent is possible in the conventional polices of life insurance. According to the EIUL policy, you can gain the highest profits at the rate of 18 percent, but with other companies, in many years this rate doesn’t increase from 4 percent so returns remain low for most of the time.

Now how the insurance companies offer tax free retirement options by purchasing the policies and by investing in the index accounts?  To answer this question, you should know these companies are not directly involved in the index investments, so there are fewer chances for monitory authorities to determine the account history and total profits gained by the clients on the invested capitals. The clients invest their money in fixed interest investment, where the costs are less and protection is more.

There are some points that must be in the mind of regular clients of EIUL, if they want to compare the policies with other traditional ones.

  • Cap- calculating the maximum profits each year.
  • Rate of participation- rate of increase in profits, if the account is in positive condition.
  • Assets fee- how much fee will be charged from the basic index account’s activity?

The rates of cap are changing between the ranges of 10-14 percent. The guaranteed permanent growth is between 3-4 percent. The rate of participation varies from 60-135 percent and has a great impact over the annual increase of profits on the invested capitals. This condition is applicable if the policy holders have S & P500 policy.

All the insurance agencies help you get tax free retirement, because they told you legal and financial methods to save taxes and increase the productivity of your investment. The value of increased EIUL profits is compared with the starting rates every year. You should check the methods and policies, if you are planning to purchase any of those.

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