life insurance

Indexed Universal Life Insurance

Sales of Indexed Universal Life Insurance policies were hot while the bull market was raging. The appeal is that it promises yearly interest based on a stock index like the S&P 500.

“The danger: If the market does down or flattens, all some buyers may be left with is an unaffordable insurance bill” according to Leslie Scism, writing for The Wall Street Journal (January 4-5, 2020). And we now know what has happened to the stock market due to the coronavirus. Such policies are often marketed as an investment where the buyer can’t lose… but that, of course, is not true.

“We joke that it takes an actuary, an attorney and sometimes an engineer to understand the calculations” said Billie Resnick, co-author of the American Bar Association book on life insurance and an independent financial advisor.

For recent buyers, the best bet is to simply refuse to pay the premium and let the policy lapse. For those who purchased years ago… not much hope.
Source: Financial Planning for Women