Indexed Universal Life (IUL)
Permanent coverage with living benefits, flexible premiums, and cash value that can grow with a market index.
What is an IUL?
Indexed Universal Life (IUL) is a type of permanent life insurance. Like other permanent policies, it provides a death benefit and builds cash value. What makes IUL different is how the cash value grows: interest credits are tied to the performance of a market index (such as the S&P 500®), without your money being directly invested in the market.
Many IUL policies also include living benefits: riders that let you access part of your death benefit early if you're diagnosed with a qualifying critical, chronic, or terminal illness. That means your policy can help while you're living, not just after you're gone. Availability and terms vary by carrier and state.
Most IUL policies include a floor (often 0%) so your credited interest won't go negative in a down year, and a cap or participation rate that limits the upside. Premiums are flexible within limits, which can be helpful but also means the policy needs to be funded and reviewed properly to perform as intended.
Who it's for
- People who want permanent coverage with growth potential
- Anyone who wants living benefits if a serious illness strikes
- Those looking for flexibility in premium payments
- Higher earners exploring supplemental, tax-advantaged strategies
- Clients willing to review their policy regularly
Frequently asked questions
Can I lose money in an IUL?
Index credits typically won't go below the floor, but policy charges and cost of insurance are still deducted. If a policy is underfunded or the index underperforms over time, cash value can decline, so proper design and annual reviews matter.
What are caps and participation rates?
They limit how much of the index's gain is credited to your policy. For example, with a cap, credited interest won't exceed that percentage in a given period even if the index does better. Carriers can adjust these over time.
What are living benefits on an IUL?
Living benefits are riders that may let you accelerate part of your death benefit while you're alive if you're diagnosed with a qualifying critical, chronic, or terminal illness. Any amount you use reduces the death benefit. Availability and terms vary by carrier and state.
Is an IUL right for everyone?
No. It's a long-term product best suited for people who can fund it consistently. We'll give you an honest comparison with term and whole life before you decide.
Can I access the cash value?
Yes, typically through policy loans or withdrawals. These reduce the death benefit and can cause the policy to lapse if not managed carefully.
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