- Term is designed for temporary protection
- IUL is permanent flexible-premium insurance
- The appropriate structure depends on the actual need
Term life and indexed universal life can both provide a death benefit, but they address different planning objectives. Term insurance is designed for a defined period and generally has no cash value. IUL is permanent, flexible-premium life insurance with cash value that can receive interest credits under index-linked formulas.
Term insurance is often considered when the primary need is a large death benefit during working years, a mortgage period, or dependent years. IUL may be considered when there is a permanent death-benefit need and the policyowner understands and can support the long-term funding and monitoring requirements.
The comparison should not be reduced to “renting versus owning” insurance. Term can be exactly the right structure for a temporary need, while permanent insurance can be appropriate for a permanent need.
IUL illustrations include non-guaranteed assumptions and policy charges. Term policies can also have important details such as conversion deadlines and renewal premiums. Compare the contracts, not slogans.
A household can also use a combination of term and permanent insurance. The decision should reflect death-benefit needs, duration, budget, health, liquidity, and tolerance for policy complexity.
Discuss your specific situation
If you want help comparing the protection need, available options, and a premium or funding level that fits your budget, SummitLine can walk through the details with you.