Generally speaking Equity Linked Universal Life Insurance policies are very complex sophisticated financial instruments and purchasers of these type products should be conversant with and understand the terms, conditions, tax consequences and other implications of owning life insurance.
Equity Linked Universal Life Insurance policies are state specific and not all insurance companies offer Equity Linked Universal life insurance policies to residents of all states.
These types of life insurance policies provide permanent coverage on the life of the insured.
These type policies are quite similar to whole life insurance; however, they have more flexible terms than whole life insurance and different crediting methods.
Cost for policy issuance is a function of the age(s) of the insured, their health condition, their smoking habits, the amount of life insurance coverage wanted, and the payment period wanted.
Payments into these type policies are flexible. Typically, payments can be made at anytime and in any varying amount.
A portion of the premium paid is credited to a cash value tax deferred cash accumulation account. Typically, policy owner’s have a choice of crediting methods: a fixed term method and or a crediting method linked to some equity related index or a combination of both.
The issuing insurance company credits Interest to policy owner's cash accumulation account. This rate varies from underwriting insurance company to underwriting company and changes from time to time, and if equity indexed it’s related by some formula to the performance of a particular equity index.
As long as there is cash value in the policy to cover premium costs the policy stays in force.
Policy loans are available.
All Equity Linked Universal Life insurance policies have a named owner, a named insured and named beneficiaries designations. These three different designations can be the same person, but in many situations they are not necessarily set up with the same designations. Which designations are the most appropriate to use depends on different variables and situations.
Someone or a company or an organization can be the owner of these life insurance policies on someone else's life only when he/she or a company/organization has an "insurable interest".
Most Equity Linked Universal Life policies are issued only after a medical questionnaire and in some cases only after medical tests.
Effectively, once an Equity Linked Universal life policy is issued by the insurance company that policy is guaranteed without a new physical, no matter your health condition, as long as the owner pays the premiums on time.
The death benefit payable to a beneficiary upon the death of the insured is dependent on the claims paying ability of the issuing life insurance company.
The death benefit payable to a beneficiary is income tax free, and in some cases estate tax free, which is dependent on a number of factors.
These Equity Linked Universal Life policies type policies are very flexible and are used for in numerous situations and for many purposes, including: estates, business purposes, buy-sell agreements, key employee plans, executive bonus, split dollar, golden handcuffs, retirement plans, educational funding plans, etc.
Some financial professionals feel from a financial value perspective the one should consider "BUYING Term and INVESTING the Difference" versus the purchase of other types of life insurance policies. And purchasers of life insurance should understand the advantages, disadvantages, limitations and consequences of each type of life insurance purchased.
