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Apr 5, 2024 by |

California Life Insurance Attorneys: Downsides of Indexed Universal Life Insurance


Indexed Universal Life Policy Disadvantages

Escalating Premiums

Complexity And Surrender Penalties

Evans Law Firm, Inc. generally cautions against indexed universal life insurance and deferred annuities for senior consumers because these insurance products are expensive, complicated, and tie up invested money for long periods of time.  Deferred annuities are primarily sold as single premium insurance contracts but with indexed universal life insurance the premium payments are periodic and increase over time.  This can be a real struggle for seniors as discussed more fully below, because the increase in premiums can be very great and require more and more money over time to keep the policy in force at the same time that a senior’s income is fixed and other expenses, such as for care, are also increasing.  Always get a second opinion from an investment advisor with nothing to gain from any sale of a deferred annuity or universal life insurance and talk to your tax advisor as these products have significant tax consequences on purchase, replacement, or surrender.  If you are over 60 and have already purchased a deferred annuity or universal life insurance policy and live in San Francisco or elsewhere in California, call us today at (415441-8669 or toll free at 888-50EVANS (888-503-8267).

Disadvantages Of Indexed Universal Life Policies

Disadvantages to universal life insurance policies include:

  • Cash value can fluctuate with markets. Indexed universal life insurance can tie your earnings into how a certain market index is performing, like the S&P 500. If your investments or markets perform badly, you won’t be growing cash value.
  • Withdrawing money from the policy will reduce the death benefit and increase your premiums. Depending on the terms of the contract, pulling money from these policies could reduce your death benefit and increase your premiums
  • Withdrawing money from the policy will also result in surrender penalties. Surrender penalties and other adjustments are imposed for as long as 15 years on some IULs.
  • Premiums will increase over time and if you do not pay the rising premiums, the policy will lapse. The increases in premiums can be very dramatic so senior policyholders on fixed income can be really stretched if they are required to pay these increasing premiums in order to keep the policy in force so their heirs will receive a benefit on the policyholder’s death.
  • You do not fully participate in the market. Policyholders select an index fund that their return on invested premiums are meant to track. However, your participation rate in the index is not 100% and you do not receive the benefit of reinvested dividends as you would in a direct mutual fund investment,

Indexed IUL Examples

A number of carriers offer IULs. Minnesota Life Insurance Company, part of Securian Financial Group, issues indexed universal life insurance policies in California and throughout the United States under the trade name Balanced Growth Advantage© or Balanced Growth Accumulator©, and similar trade names.  Minnesota Life, and its parent corporation Securian Financial market Balanced Growth Advantage or Balanced Growth Accumulator IULs in California and throughout the United States.

Pacific Life Insurance Company (usually referred to just as “Pacific Life”) is another seller of indexed universal life insurance in California and throughout the United States.  Pacific Life issues policies through its subsidiaries Pacific Life & Annuity Company and Pacific Life Insurance Company.  Trade names include Pacific Life PDX, Pacific Indexed Accumulator, Pacific Discovery Xelerator IUL, Pacific Indexed Estate Preserver, or Pacific Discovery Protector IUL.  Pacific Life offers riders to these IULs for additional premiums. 

Contact Us

If you or a loved one has purchased a Minnesota Life Insurance Company/Securian Financial Eclipse Protector IUL© or Value Protection IUL©, or an IUL issued by Pacific Life, contact Ingrid M. Evans and the other California annuity attorneys at Evans Law Firm, Inc. toll free at (888)50-EVANS (888- 503-8267), or by email at <a href=””></a>.

Leading providers and distributors of universal life insurance and fixed, variable and fixed indexed deferred annuities in California are listed below.  We are not in any way suggesting that any of these carriers or distributors has done anything wrong.  Rather, the list is provided solely as a reference for our readers.

AIG/American General Life Insurance Company

Allianz Life Insurance Company of North America

American Equity Investment Life Insurance Company

American General Life Insurance Company/AIG

American International Group, Inc. (AIG)

American National Life Insurance Company

Athene Annuity & Life Assurance Company

Athene Annuity and Life Company

Athene USA

Aviva Life Insurance Company

AXA Equitable Financial Services, LLC

AXA Equitable Life Insurance Company/AXA US

AXA Advisors, LLC

Brighthouse Financial, Inc./MetLife

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Genworth Financial, Inc.

Genworth Life and Annuity Insurance Company

Genworth Life Insurance Company

Guggenheim Partners, LLC

Guggenheim Partners/Security Benefit Life Insurance Company

ING USA Annuity and Life Insurance Company

Jackson National Life Insurance Company

John Hancock Life Insurance Company

Lincoln Benefit Life Company

Lincoln Financial Group

Massachusetts Mutual Life Insurance Company

Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.

Minnesota Life Insurance Company

Nationwide Investor Services Corporation (NISC)

Nationwide Life and Annuity Insurance Company

Nationwide Life Insurance Company

New York Life Insurance Company

Northwestern Mutual Investment Services, LLC

Northwestern Mutual Life Insurance Company

Northwestern Mutual Wealth Management Company

Pacific Life & Annuity Company

Pacific Life Insurance Company


Securian Financial

Securian Life Insurance Company

Security Benefit Corporation

Security Benefit Group, Inc.

Security Benefit Life Insurance Company/Guggenheim Partners

Security Investors, LLC

Security of Denver Life Insurance Company/Voya

Transamerica Life Insurance Company

Voya Financial Advisors

Voya/Reliastar Life Insurance Company

World Financial Group Insurance Agency, Inc.

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