Indexed Universal Life (IUL) is a permanent policy similar to a traditional UL policy through its flexibility of premium and death benefits; however, it also features a higher growth potential through index interest crediting.
The policy owner has the ability to choose a percentage of the cash value to invest within specified “indexes” (such as the S&P 500 or Nasdaq 100) to increase the chances of larger returns.
From fixed-rate models to variable ones, Indexed Universal life insurance comes in various types. IUL insurance policies can help you to build wealth while leaving behind a death benefit for your loved ones. These policies put a portion of the policyholder’s premium payments toward annual renewable term life insurance, with the remainder added to the cash value of the policy after fees are deducted. On a monthly or annual basis, the cash value is credited with interest based on increases in an equity index.
IUL insurance policies provide greater upside potential, flexibility, and tax-free gains. This type of life insurance offers permanent coverage as long as premiums are paid. In general, these policies are best for those with a large up-front investment who are seeking options for a tax-free retirement.
People who need permanent life insurance protection but wish to take advantage of possible cash accumulation via an equity index might use IULs as key person insurance for business owners, premium financing plans, or estate-planning vehicles.