Lifelong protection with cash value potential
An IUL combines a death benefit with cash value that can earn interest based in part on the performance of a market index.
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How an IUL works
Where your premium goes
Indexed universal life is permanent life insurance. It is not an investment in the stock market.
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You pay premiums
Payments can be flexible within the limits of the policy.
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Charges are deducted
Cost of insurance and policy fees come out every month.
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Cash value is credited
Interest is credited based on an index, subject to a floor and a cap or participation rate.
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Death benefit remains
As long as the policy stays in force, a benefit is paid to beneficiaries.
Crediting methods, caps, participation rates, and fees vary by contract and can change. Illustrations are hypothetical and are not guarantees.
Important limitations and risks
IUL can be a useful tool for the right person, but it is not right for everyone. Understand these points before deciding:
- Index gains are limited by caps and participation rates
- Policy charges continue even when index credits are zero
- Underfunded policies can lapse
- Loans and withdrawals reduce cash value and the death benefit
- Results are not guaranteed
- Tax treatment depends on proper structure — consult a tax professional
Who it may fit
- People seeking permanent coverage
- Those who want flexible premiums
- People with a long-term time horizon
- Those able to fund a policy consistently
Frequently asked questions
Can I lose money in an IUL?
Index credits typically have a floor, but policy charges continue, so cash value can decrease, especially if the policy is underfunded. Review illustrations carefully.
Is the cash value tax-free?
Cash value generally grows tax-deferred, and loans may be accessed income-tax-free if the policy is structured and managed properly. Consult a tax professional about your situation.
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