$10,000, $300 is added to the cash value (6% x 50% x $10,000 = $300). IUL insurance policies are less risky than variable life insurance because no cash is directly invested in the stock market. Advantages and Disadvantages of IUL Insurance While not for everyone, IUL insurance policies are a viable option for people seeking permanent life insurance with a cash component that earns interest plus a death benefit. This type of life insurance is more expensive than term life insurance, but you get permanent coverage and the death benefit paid tax-free to your beneficiaries when you die. The policy may even increase in value due to the cash value component, and you may be able to borrow from your account. Advantages • Flexible premiums: As with standard universal life insurance, the policyholder can increase their premiums or lower them in times of hardship.7 • Cash value accumulation: Amounts credited to the cash value grow tax-deferred. The cash value can pay the insurance premiums, allowing the policyholder to reduce or stop making out-of-pocket premium payments.4 • Investment flexibility: The policyholder controls the amount risked in equity-indexed accounts, and the death benefit amounts can be adjusted as needed. Most IUL insurance policies offer a host of optional riders, from death benefit guarantees to no-lapse guarantees. • Death benefit: This benefit is permanent, not subject to income or death taxes, and not required to go through probate. • Less risk: The policy is not directly invested in the stock
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