What is an IUL?

Indexed universal life insurance, or IUL, is a type of permanent universal life insurance. Instead of earning interest at a fixed rate, the cash value portion is tied to the performance of a market index, like the S&P 500. 

The good this is is that you won’t lose money when the market has a downturn. This is because a guarantee applies to your principal, insuring it against losses. On the other hand, there’s usually a cap on the maximum return you can earn. Many times, you’ll also be able to divide your assets between fixed and indexed portions of your policy. 

The attraction of IUL policies often lies in their potential for higher returns, especially in a robust stock market environment. Since the cash value’s growth is linked to the market, periods of market upturn can lead to significant interest credits in the cash value account. It is very crucial to understand that these returns are not guaranteed and are subject to the terms of the cap and the performance of the chosen index. For individuals or families that get too nervous about the ups and downs of the stock market for future retirement, an IUL might be a more comfortable solution to invest your money in. 

Benefits of an IUL 

Can create tax-free retirement

No risk of losing money & benefit from market-linked gains 

Flexible premiums & typically higher with unlimited contributions

Loan availability 

Can include living benefits

For those who are looking for more than just a death benefit

Age & health conditions to qualify