But beware: Insurance companies and agents have also marketed attractive projections on indexed universal life.
These policy illustrations say that customers can capture as much as 12 percent of an index's performance and demonstrate credited interest rates of up to 7 percent, experts say.
This is dangerous because if an indexed universal life contract does not perform according to the projection, the customer may be on the hook for higher premiums in future years to cover the fees on the policy and keep it in force.
"If you're looking at an illustration that shows [an index gain of] 12 percent every year, it's going to be more volatile than that," Voya's Johnson said. "The customer may think they'll need to put in fewer premiums, and that can cause disappointment for everyone."
State insurance regulators at the National Association of Insurance Commissioners last year released guidelines that insurers can use when illustrating policy performance, placing curbs on index values and crediting rates.
Because there are so many moving parts to an indexed universal life insurance policy, it makes sense to review the policy with an independent third-party or advisor to monitor any changes to the contract's expenses, interest rate and premiums.
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