Indexed universal life insurance (IUL)
Indexed universal life is insurance that offers death benefit protection, and the opportunity to earn tax-deferred interest on the interest credits linked to the performance of one or more stock market indices chosen. This feature gives you the potential for cash value accumulation plus, it offers downside protection in a poorly performing market because you do not participate directly in the stock market and the credited interest rate is never less than the minimum interest rate or zero percent (floor). The upside is limited by either an index cap rate or an index participation rate. The index cap rate is the maximum interest rate that could be credited to the policy. The index participation rate is applied to the index change in order to calculate the index credit. The premium paid in the policy is not directly invested in any index or the stock market.
Policy highlights
- The death benefit is not generally subject to income taxes for the beneficiary.
- It offers the potential to grow cash value.
- The amount credited to the cash value grows tax-deferred without directly investing in the market.
- Flexible, adjustable premium, and death benefit amounts as needs change.
- It can be an expensive product depending on your goals.
Is an indexed universal life insurance policy right for me?
If interested in providing a death benefit for your beneficiaries with additional benefits, an indexed universal life insurance policy might be attractive to you for its upside growth potential and downside protection.
Watch the video below if you want to learn more about indexed universal life insurance.