Guaranteed Indexed Universal Life Insurance - Mitigating Market Risks
Edward “Ed” J. Wendol is founder and managing partner of Total Security Planning and Mentoring Group, LLC, which provides comprehensive insurance solutions spanning 13 states. Among the products Edward J. Wendol offers is guaranteed indexed universal life insurance. Ideal for younger clients seeking to ensure a steady income stream during their later years, this policy type was introduced in the late 1990s and continues to steadily increase in popularity. The indexed policy is rooted in universal life insurance (UL), which offers a guaranteed interest rate, with money credited to a cash account based upon a declared amount of interest. Indexed universal life insurance differs in having the money deposited into the cash account pegged to a financial index, such as the Standard and Poor’s 500. The indexed policy does not involve a direct investment in a stock index. Rather, the index’s financial value is used in computing the interest credited to the policy’s cash account. This mitigates the downside risks related to market fluctuations found with products such as variable universal life insurance policies. The penalty for this risk-averse approach is that the carrier can cap the amount of the upside that can be credited to the account.