Indexed universal life: lifelong coverage with cash value linked to an index.
An indexed universal life (IUL) policy is permanent life insurance. Part of what you pay can build cash value, and the interest credited to that cash value is based on the performance of a market index, within limits set by the policy.
What IUL is
IUL is a type of universal life insurance. It has a death benefit and a cash value. Premiums are flexible within limits: you can pay more or less from year to year, as long as there is enough value in the policy to cover its costs.
Your money is not invested directly in the stock market. Instead, the carrier credits interest based on changes in an index, such as the S&P 500, using formulas set out in the policy.
Caps, floors, and participation rates
A cap is the most interest the policy will credit in a period, even if the index does better. A floor, often 0%, means a negative index period credits no interest instead of a loss. A participation rate sets how much of the index change counts. Carriers can usually change caps and participation rates over time, within the minimums in the contract.
Policy charges matter
The cost of insurance and other policy charges come out of the cash value every month. Those charges generally increase as you age. Even with a 0% floor, cash value can go down in years when credited interest is low, and a policy that is not funded enough can lapse.
Illustrations are not guarantees
Before you buy, you should receive an illustration showing how the policy might perform. It shows guaranteed values and non-guaranteed values based on assumptions. Actual results will differ. We go through the guaranteed column with you, not just the optimistic one.
Loans and withdrawals
You may be able to borrow from or withdraw part of the cash value. Loans accrue interest and, with withdrawals, reduce the death benefit and the cash value. Taking too much can cause the policy to lapse, which can have tax consequences. Talk to a tax professional about your situation.
How getting an IUL coverage works with us.
We're an independent agency, so we compare options from multiple carriers instead of pushing one company's product.
Talk through your goals
Why you want permanent coverage, your budget, and how long you can fund it. IUL is a long-term commitment, so this conversation matters most.
Review illustrations
A licensed agent compares IUL options from multiple carriers and walks you through guaranteed and non-guaranteed values, charges, and caps.
Apply and fund the policy
If IUL fits, we help with the application and underwriting, then review the policy with you over time.
IUL questions, answered plainly.
Can I lose money in an IUL?
The floor protects against negative index credits, but policy charges still come out of the cash value. In years with low or zero credited interest, cash value can go down. If cash value runs too low, the policy can lapse unless you add premium.
Is an IUL an investment?
No. IUL is life insurance. It is not a security, and your cash value is not invested in the stock market. Interest is credited based on an index using formulas in the policy, subject to caps, floors, and participation rates.
Are the numbers in an IUL illustration guaranteed?
Only the guaranteed values are. Non-guaranteed values are based on assumptions about future crediting rates and charges, and actual results will be different. Always look at the guaranteed column too.
How is IUL different from whole life?
Whole life usually has a fixed premium and guaranteed cash value growth set by the contract. IUL has flexible premiums and index-linked crediting, which adds upside potential but less certainty. Whole life typically has more guarantees.
How is IUL different from term life?
Term covers a set period and usually has no cash value, so it costs less. IUL is designed to last for life and has a cash value, which makes it more expensive for the same death benefit.
Do I need a medical exam for IUL?
It depends on the carrier, your age, and the coverage amount. Some policies use health questions and records instead of an exam. Approval and pricing depend on your answers to health questions and the carrier's underwriting.
Not sure this is the right fit? Take our 4-question coverage guide.
Coverage is issued by the insurance carrier and is subject to underwriting approval. Policy features, riders, and availability vary by carrier, product, and state, and not every product is available in every state. This page is general education, not tax, legal, or financial advice, and it is not an offer of insurance.
See what an IUL coverage could look like for you.
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