An Indexed Universal Issue Policy is a flexible life insurance product with benefits that last until the client passes away, with the cash value tied to investments and accumulating over time. The main advantage for policyholders is the ability to take advantage of the upside of the stock market while being protected from the market’s downside.

Upon the insured person’s death, the beneficiary receives a lump sum of cash. This type of policy provides death protection plus savings (or cash value). The amount of money dedicated to death protection is based on the age and health of the person, as well as the face amount of the policy.

The main advantages of an Indexed Universal Issue Policy are:

• The ability to pay more into the policy than the cost of insurance (COI), because the remainder is invested — creating tax-deferred cash value.
• There are no contribution limitations, hedging risks associated with retirement savings.

It’s important to know that there are usually four different charges deducted from the cash value of an Indexed Universal Issue Policy:

• Premium Load Charge = assessed each time a premium is paid
• Monthly Charge per $1,000 of Death Benefit = only assessed for the first 10 years
• Annual Expense Charge = usually nominal
• Monthly Cost of Insurance per $1,000 of Death Benefit = the mortality charge associated with providing the policy’s death benefit (and the only charge scheduled to increase each year)