Question 1

What is indexed universal life insurance?

Accepted Answer

Indexed universal life insurance is a type of permanent life insurance policy that allows policyholders to allocate a portion of their premiums to a cash value account. The cash value account is tied to a stock market index, such as the S&#038;P 500, and can potentially grow based on the performance of the index.

Question 2

What is survivorship life insurance?

Accepted Answer

Survivorship life insurance, also known as second-to-die life insurance, is a policy that covers two individuals and pays out the death benefit only after both insured parties have passed away. It is often used as a way to provide financial protection for heirs or to cover estate taxes.

Question 3

What are the key differences between indexed universal life insurance and survivorship life insurance?

Accepted Answer

The main difference between indexed universal life insurance and survivorship life insurance lies in their purpose and functionality. Indexed universal life insurance focuses on providing an individual policyholder with a death benefit and a cash value component that can potentially grow based on the performance of a stock market index. On the other hand, survivorship life insurance is designed to cover two individuals and pays out the death benefit only after both insured parties have passed away.

Question 4

Can indexed universal life insurance be used as survivorship life insurance?

Accepted Answer

No, indexed universal life insurance cannot be used as survivorship life insurance. Survivorship life insurance policies are specifically structured to cover two individuals and pay out the death benefit upon the death of both insured parties. Indexed universal life insurance is designed for individual coverage and does not provide the same features and benefits as survivorship life insurance.

Question 5

Which type of life insurance is better for estate planning purposes?

Accepted Answer

Both indexed universal life insurance and survivorship life insurance can be used for estate planning purposes, but the choice depends on individual circumstances. Indexed universal life insurance can offer flexibility and potential cash value growth, which may be beneficial for estate planning. Survivorship life insurance, on the other hand, can provide a cost-effective way to cover estate taxes and leave a financial legacy for heirs. It is recommended to consult with a financial advisor or insurance expert to determine which option aligns best with specific estate planning goals.

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