Equity-indexed life insurance products promise stock market-like returns with no risk of losing money (if market returns are negative, the return of the life insurance product will be 0%). These products can be very attractive to investors that have a lower risk tolerance, but still want to capture the upside of the stock market. As the market rises, the cash value of an equity-indexed policy rises with it; when the market falls, the cash value of the policy does not rise or fall.
Thanks for covering this subject, it’s something I’ve been pitched in the past and wasn’t 100% sure if I was reading the situation correctly but it seems I made the right choice!
Equity index annuities are fixed income products thus the word equity is deceiving. They are basically very illiquid CD type products with a huge surrender charge and a large commission for the agent selling them as well as large ongoing expenses
Are Equity-Indexed Life Insurance Products Good Investments?
Great Job, Daniel! You covered the topic well and given me a great white paper to point to when the discussion comes up.
Excellent, clearly-written article on what can be a confusing topic. Thank you Daniel!
Thanks for covering this subject, it’s something I’ve been pitched in the past and wasn’t 100% sure if I was reading the situation correctly but it seems I made the right choice!
What is the best option for getting out of an IUL?
I once invested in a PPN and they operate similarly.
Equity index annuities are fixed income products thus the word equity is deceiving. They are basically very illiquid CD type products with a huge surrender charge and a large commission for the agent selling them as well as large ongoing expenses