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Learn the truth behind 6 common myths about IUL policies

If you’ve talked to friends or family about life insurance, you’ve likely encountered some misconceptions about it. There are pros and cons with any financial product, and life insurance is no different – but it’s important to base lifelong financial decisions on real facts. Let's get to the bottom of some common life insurance misconceptions so you can decide if an indexed universal life (IUL) policy is right for you.

1. “If my insurance carrier goes out of business, my family won't receive the death benefits.”

Policy guarantees are based on issuing insurer’s ability to pay claims as they arise. To understand how insurers measure up for financial stability, check their ratings. Insurance carriers are rated by independent, third-party agencies that evaluate and assign ratings to carriers based on their financial strength, creditworthiness and ability to meet policyholder obligations.

State-level insurance guaranty associations provide an added layer of consumer protection. These associations protect policyholders if an insurance company can’t meet its obligations.

2. “Life insurance is only for covering funeral or burial expenses.”

You probably think of life insurance as offering protection for your loved ones when you’re no longer around. It’s true that it’s a product designed to provide that protection first. However, IUL policies offer multiple benefits:

  • Legacy – Protection for your loved ones and a death benefit to your family after you’re gone, no matter how long you live.
  • Living – If you qualify with a critical, terminal or chronic illness, a policy that includes a living benefits rider will let you tap into your death benefit early to access money for your needs.
  • Aspirations – IULs can be used to save for retirement and generate income from your policy when you access its cash value.

3. “IUL policies are subject to market loss.”

With an indexed universal life policy, you can place the account value into an index crediting option where its growth is tied to market-linked indexes (like the S&P 500®). Your money is never actually invested in the market, however. This allows you to get a portion of the upside from index performance, without risk of market loss.

That’s different from variable universal life policies, where your account value is invested in the stock market and subject to the market’s ebbs and flows. Read your contract carefully to understand any risk that may impact your policy.

4. “All life insurance policies require a medical exam and take a long time to get.”

Most carriers today offer exam-free underwriting to make the process easier and more efficient. Carriers may ask for a brief telephone interview or medical records, but even that is becoming less common as underwriters continue to innovate and make better use of technology.

For example, at F&G we offer exam-free underwriting to 99% of applicants1 up to age 60 and at face amounts through $1,000,000, with over 50% of applicants approved in five days or less.2

5. “Life insurance costs too much money.”

Many people understand the importance of life insurance but assume it's unaffordable. In fact, a study by LIMRA and Life Happens found that most clients overestimate the cost of a life insurance policy by as much as two-thirds.3

This misperception contributes to a life insurance coverage gap, preventing many Americans from securing financial protection. Talk to a financial professional - life insurance may not be as expensive as you think.

6. “Only a family's breadwinner needs life insurance.”

Life insurance policies aren’t just for breadwinners. Life insurance can have real benefits for the rest of the family, from stay-at-home parents to children.

Many stay-at-home parents handle money, cook meals and take care of the home. These tasks are worth an estimated $145,0004 a year. A life insurance policy can protect the value of this work just like it protects a working spouse’s income.

Policies called Juvenile IULs can help you save in anticipation of your children or grandchildren’s different life stages. Families can purchase insurance on the lives of dependent children to prepare for future financial needs, like savings, education planning and protecting their future insurability.

Learn more about life insurance at F&G.

2 These percentages reflect F&G’s life new business from 12/31/22 through 12/31/23. Past business does not guarantee future decisions.

3 https://www.limra.com/en/newsroom/news-releases/2024/u.s.-life-insurance-need-gap-grows-in-2024/

4 https://www.insure.com/life-insurance/the-mothers-day-index.html


“F&G” is the marketing name for Fidelity & Guaranty Life Insurance Company issuing insurance in the United States outside of New York. Life insurance and annuities issued by Fidelity & Guaranty Life Insurance Company, Des Moines, IA.

For applicants who are not U.S. citizens or not permanent resident cardholders, the maximum issue face amount for exam-free underwriting is $300,000. In Puerto Rico, exam-free underwriting is available for applicants age 0-45 who are applying for less than $150,000.

Policies issued by Fidelity & Guaranty Life Insurance Company, Des Moines, IA.

Guarantees are based on the claims paying ability of the issuing insurer, Fidelity & Guaranty Life Insurance Company, Des Moines, IA.

Issuance may be dependent on answers to the health questions on the application.

Subject to state availability. Restrictions may apply.

Optional provisions and riders have limitations, restrictions and additional charges.

Please review the policy for premium details. If premiums are not paid, as scheduled, your policy may terminate or may increase the likelihood that the surrender value will be insufficient to cover the monthly mortality costs and expense charges unless additional premium is paid.

Information provided regarding tax or estate planning should not be considered tax or legal advice. Consult your own tax professional or attorney regarding your unique situation.

No bank guarantee. Not FDIC/NCUA/NCUSIF insured. May lose value if surrendered early.