Index Universal Life Insurance

Index universal life (IUL) insurance includes the premium flexibility and adjustable death benefit that typical UL coverage provides. Plus, IUL can provide the potential for greater policy value growth than UL, with less risk to you than a Variable Universal Life policy.

IUL policies link the growth of policy value to the percentage change of one or more widely-followed financial market indices such as the S&P 500® Index, Nasdaq-100®, or Dow Jones Industrial Average. As a rule, IUL policies also include a fixed-rate interest crediting option.

Insurers offering IUL policies credit interest at rates that are linked to the percentage change of a selected index. These companies typically provide a “crediting rate zone” with a cap that represents the maximum crediting rate and a floor that represents the minimum crediting rate. Based on the percentage change in the index, interest will be credited between the cap and floor.

With IUL, your policy value can be credited with higher interest rates than whole life and UL policies typically provide. You may have greater downside protection than Variable Universal Life, but, compared to Variable Universal Life, the upside potential is more limited.

Index Universal Life Insurance coverage is typically purchased
for one of two reasons:

  • A death benefit index UL product solution is designed to provide affordable death benefit guarantees with the opportunity for cash value growth to provide financial flexibility.
  • A cash accumulation index UL product solution provides a death benefit, and is also designed to accumulate policy value that can be used to supplement income, either as a withdrawal or policy loan, on an income tax-free basis1 later in life.

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