Plain-English Guide
Indexed Universal Life Insurance
IUL is permanent life insurance with a cash value account. Interest credited to that account is linked in part to a stock market index, but you are not invested in the market directly.
Purpose
- Provide lifelong death benefit protection.
- Build cash value that may be accessed later through loans or withdrawals.
Benefits
- Many policies include a floor that limits index-related losses in a crediting period.
- Flexible premiums within policy limits.
- Death benefit is generally income-tax-free to beneficiaries under current law.
Costs
- Premiums are higher than term life for the same death benefit.
- Policies carry cost-of-insurance charges, administrative fees, and surrender charges.
- These charges can rise as you age.
Limitations
- Caps and participation rates limit how much interest you can earn.
- Insurers can change caps and rates within contract limits.
- Illustrations are hypothetical, not promises.
Risks
- Cash value growth is not guaranteed and may be lower than illustrated.
- Underfunding or loans can cause the policy to lapse, which may create taxes owed.
- Surrendering early can mean getting back less than you paid.
This page is general education, not advice or a quote. Approval, pricing, and benefits depend on underwriting and the specific policy issued. Always review the policy contract and illustration before buying.
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