3 Myths of Indexed Universal Life Insurance

There are many myths behind whole life insurance.  Some them include, "You don't have to pay for insurance after the first 15 years", "The cost of insurance never goes up" and "You don't ever have to pay back the loans".  All of these are myths that have been debunked within this blog.  Today, we will talk about each of these myths.

Suppose you have a whole life insurance contract and around the age of retirement, you start to take loans against the policy.  After a few years, you may have a half million dollars worth of loans.  Around age 70, you find the cost of insurance to be high.

At the point, you see the cash value in your life insurance contract not returning the expected amount.  You do some digging only to find that even though you aren't paying any premiums, you are still paying for expensive life insurance through your so called earnings.

At this point, you don't really change much because you already have taken out over a half million dollars in loans.  Around age 80, you see the cash value in your life insurance contract becoming stagnant.  You do some digging only to find that the cost of insurance is extremely high and has been increasing over the years according to your policy.  You look at the hypotheticals only to find that this cost is no where to be found.

At this point, you feel in a bind, because if you surrender the policy you will have to pay back the million dollars in loans.  So you decide to continue paying the high cost of insurance.  Eventually, you move on to a better place.

Your kids, ready to receive their inheritance then get notified that they will get the life insurance money but only after the loans are paid.  Most of your life's hard earned money has been drained leaving the kids with little to nothing.

Make sure this doesn't happen to your family.

This post was reposted from http://finlit.biz/life-insurance/3-myths-of-indexed-universal-life-insurance/, originally written on April 9th, 2013.