Recent gains in the stock market have been a source of optimism for investors. The rising stock market has also broadened the appeal of certain investments that are linked to stock performance. Two kinds of life insurance policies that connect benefits to stocks are variable universal life and indexed universal life insurance policies. It is important to be aware of the risk associated with these types of life insurance policies. California securities and whistleblower attorneys say that if projected gains sound too good to be true they probably are.
Variable universal life and indexed universal life insurance both contain standard death benefits. Policyholders also have the option of capturing increases on money that is deposited into tax-deferred accounts. However, those gains are dependent on stock market performance. Purchasing a variable universal life insurance policy can expose investors to gains and losses on their investment. With indexed universal life insurance policies, the insurer holds the money and normally pays interest into the account based on the performance of a bench-mark index. This index is often the S&P 500. California securities and whistleblower attorneys say that linking life insurance policies to the stock market carries risk that consumers should be aware of.
These types of variable policies can be a useful tool for savvy investors in certain circumstances. However, most middle class investors lack the knowledge to understand the complexities of the product, and should be wary. According to insurance consultants, investors should beware of the sales illustration because it is easy for agents to make projected performance of a policy look good. When the market is doing well these types of policies can perform adequately. The risks are not to be ignored because if the market is not performing well then policyholders may have to come up with extra money to pay annual premiums. California securities and whistleblower attorneys suggest consulting with a registered investment advisor that is not making a commission off of the products they sell to determine which investments work best for you.
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