Like any whole life insurance product, it guarantees a payout upon death. Indexed universal life is for people who want to get more out of life insurance and see it as an investment. What is whole life insurance? In the end, a detailed comparison of whole life insurance and index universal life insurance will help you understand how to best move forward. Here are four reasons why Equity Indexed Universal Life (EIUL) policies aren’t recommended when you want predictable, guaranteed growth and/or if you intend to use the policy for becoming your own financing source, as is the case with Bank On Yourself.. The products are designed to do completely different things. Whole Life Insurance. Whole life insurance policies have a fixed premium, meaning you pay the same amount each and every year for your coverage. These policies have two main parts—and investment portion and an insurance portion. What is indexed universal life insurance? IUL is similar to the more familiar whole life insurance policy in that it is composed of 2 basic pieces: First, a permanent insurance policy that will pay a death benefit whether you die young or old; and, second, a cash value account from which you can borrow money tax-free (but not interest-free) in order to pay for expensive items, educational expenses, or your retirement. The Estate Planning Advantage of Universal Life Policies Over Whole Life Policies. Much like universal life insurance, whole life has the potential to accumulate cash value over time, creating an … Reducing the index cap is specific to IUL policies, but increasing costs can be a risk with many different types of life insurance policies. A portion of your premium funds the policy just like it would in a health, auto, or homeowners insurance … The Debate: Indexed Universal Life vs. With indexed universal life insurance, the premium structure is unbundled (unlike whole life insurance). Whole and Universal life insurance fall into the same category—Permanent life policies. Whole Life vs Indexed Universal Life. Indexed universal life insurance is a type of permanent life insurance — a life insurance policy that stays in effect for your whole life as long as the premiums are paid (as opposed to a term policy, which expires after a set amount of time). And, like other types of universal life insurance, IUL holds cash value that goes up over time, as premiums are paid. So, we will first begin by comparing these two different types of life insurance policies. Whole life insurance and universal life insurance both have a cash-value component. While it is true that indexed universal life (IUL) differs in significant ways from whole life insurance, there are nevertheless a number of similarities to be found when comparing IUL vs whole life. (The exact amount that goes into savings is determined by your individual policy.) The debate of Whole Life vs Indexed Universal Life is highly dependent on each individual. This is the only way to be 100 percent confident that you are making the right decision. It’s the age-old Tortoise vs. the Hare story. When it comes to comparing whole life vs Indexed Universal Life many people get it wrong! Each month, a certain portion of the premium you pay to keep the policy active goes into a tax-deferred savings account, known as the cash value of the policy. This means that the cost of insurance when you’re younger is cheaper so more of your premium dollars are accumulating compounding interest and growing the cash value faster than a whole life insurance policy. The result has been Universal Life, which has promised – if not always delivered – greater flexibility and faster growth of cash value. 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