Have You Looked into Indexed Universal Life Yet? It Offers Safety and Good Returns

by L.A.S.

Many Boomers, discouraged by their investment returns after the debacles of the 1990s and 2008, have checked into the indexed universal life insurance.

Boomers, stung by hard losses in previous stock market downturns, have found one likely candidate for safe investing. Indexed universal life insurance offers the investor the ability to lock in gains during the good years, and protection of your account during the bad years.

Indexed universal life offers a zero percent floor, meaning you will not lose your principal even if the market goes bad. This provides preservation of capital. The only drawback is the the investor has fewer investment options than with other forms of variable universal life, but for many of us, simpler is better. Owners of these policies can sleep better at night, too.

More than 50 percent of the sales of this product are to Boomers. They trade off not receiving dividends for their participation in the plan.

Other types of investment vehicles that have seen increased sales are fixed annuities and multiyear-guarantee (aka CD-type annuities).

Insurance carriers have guidelines regarding the suitability of annuities for a client. The parameters include: age 40 or more, has considered alternative investments, is appropriate for the client, has funds to sit in this account for an extended period, has sufficient liquidity so that he or she will not have to dip into their annuity for the foreseeable future, and maintains at least 20 percent of their net worth for immediate needs and emergency funds.