How it works
IUL does not invest directly in the stock market. Interest crediting is based on an index formula with caps, participation rates and floors. Policy charges are deducted from value.
Who may benefit
People seeking permanent protection and flexible design who can fund and monitor the policy over time may consider IUL.
Important considerations
Illustrations are not guarantees. Underfunding, changing rates, charges or loans can affect policy performance and may cause lapse.
Questions to review before applying
- How long is coverage needed?
- What premium fits the household budget?
- Are benefits guaranteed or illustrated?
- What exclusions, waiting periods or surrender charges apply?
- How does this option compare with alternatives?
Indexed Universal Life: A Deeper Review
Policy mechanics to understand
An indexed universal life policy combines permanent life insurance with a cash-value account. Interest crediting may reference an external market index, but the policy is not a direct investment in that index. Caps, participation rates, spreads, floors, policy charges and premium funding all affect results.
Illustrations are scenarios—not guarantees
Review both guaranteed and non-guaranteed columns. Ask what assumptions are used, how often crediting terms may change, how policy loans affect values, and what premium may be needed if future results are lower than illustrated.
Funding and lapse risk
Flexible premium does not mean any premium will sustain coverage indefinitely. Charges continue even during low-crediting periods. Underfunding, withdrawals or loans can increase lapse risk, especially later in life.
Questions for a policy review
- What death benefit option is being illustrated?
- Which values are guaranteed and which are not?
- What are the current cap, participation rate, spread and floor?
- How do surrender charges and policy loans work?
- What premium is designed to support the intended duration?
- What happens under a lower-crediting stress test?