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Indexed Universal Life (IUL) insurance is a life insurance policy that can earn money, with only moderate risk. While offering flexible benefits and premium features, an indexed universal life insurance policy might be the one for you. While IUL may seem complex, doing your research can help you understand this type of life insurance policy to decide whether it’s right for you.

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Many policyholders appreciate IUL policies due to the flexibility, since premiums and death benefits can be adjusted. In addition, IUL policies come with an investment portion that may be attractive to some policyholders. Is indexed universal life right for you? Doing research on this type of policy may help you decide but don't worry, we will do the research for you! ​

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What exactly is Indexed Universal Life (IUL) insurance?

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Indexed universal life insurance is a type of permanent life insurance. This permanent life insurance policy features two important components: life benefits and tax advantaged cash accumulation. Each time you make a premium payment, the insurer puts a portion of that money in your policy’s cash value account.

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Traditional universal life insurance policies earn gains based on a money market rate of interest. But the savings component of IUL insurance is linked to an index of investments, like the Nasdaq Composite or S&P 500, but only mirrors the index gains without suffering the losses in the market index. IUL policies typically guarantee a certain interest rate for returns, with a possibility of capped or uncapped returns.

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Typically, permanent life insurance policies provide a lifetime of protection as you continue to pay the premiums. After your policy builds a cash value, you can borrow against it tax free. 

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How does IUL insurance work?

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The insurance market offers various IUL products. Some offer lifetime protection, while others provide guaranteed protection up to a certain age, typically to age 85 or 90. Some IULs provide coverage up to the maturity date, typically when the insured turns age 95 or 100, if the policy maintains a cash value, then pays the insured the cash value and suspends coverage.

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With a IUL insurance policy, the provider will make all investment decisions. The carrier may invest in bonds or up to four or five market indices, which may include the Fidelity AIM Dividend Indexed account, Nasdaq Composite account or one or more S&P 500 accounts. Since markets fluctuate, IUL insurance policies typically feature an interest rate guarantee, which provides downside protection for your cash value account.

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IUL insurance policies earn tax-deferred gains and after your policy builds a cash value, you can take out a loan against your earnings. Since you are borrowing your own money, you can use the funds for whatever you like, to make a down payment on a house, pay your child’s college tuition or even take a dream vacation. Like any other loan, the funds you lend to yourself will slow the cash accumulation of your policy until you repay, and can also reduce your death benefit if not repaid.

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How to get started on your quote

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To get started on your quote, call our office or schedule your appointment today by clicking here.

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Either way we’ll make the process simple!