The stock market has been on a rollercoaster ride over the last 5 years. Starting off strong in 2016, with the S&P 500 index rising by 9.54%, the market continued to climb, reaching an all-time high in late 2019. However, the COVID-19 pandemic caused a major market crash in early 2020, with the S&P 500 plummeting by 34%. Despite this setback, the market has since recovered, ending 2020 with a gain of 16.26%.
In comparison, an index universal life insurance (IUL) policy is a type of life insurance that also offers the potential for cash value growth, similar to a stock market investment. The cash value growth of an IUL policy is typically tied to a market index, such as the S&P 500, and therefore, its performance is closely tied to the stock market.
Over the last 5 years, an IUL policy tied to the S&P 500 would have seen similar gains and losses as the stock market. However, it is important to note that an IUL policy also offers a death benefit, which can provide financial protection for loved ones in the event of the policyholder's death. Additionally, an IUL policy may offer more favorable tax treatment for the cash value growth compared to a traditional stock market investment.
It's worth noting that it's important to remember that the stock market is inherently volatile and past performance is not a guarantee of future results. It's also important to note that IUL policies vary in their features and it is important to understand the terms and conditions before purchasing one.
In conclusion, while the stock market has seen its ups and downs over the last 5 years, an index universal life insurance policy can offer a similar potential for cash value growth while also providing a death benefit and potentially more favorable tax treatment. As always, it's important to consult with a financial advisor before making any investment decisions.