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Indexed Universal Life (IUL) Insurance

Mature couple reviewing universal life paperwork in their kitchen.

What Is Indexed Universal Life (IUL) Insurance?

Universal life (UL) insurance comes in a lot of different flavors, from fixed-rate models to variable ones, where you select various equity accounts to invest in. Indexed universal life (IUL) insurance allows the owner to allocate cash value amounts to either a fixed account or an equity index account. Policies offer a variety of well-known indexes, such as the Nasdaq-100 or the S&P 500. IUL insurance policies are more volatile than fixed ULs, but they are less risky than variable UL insurance policies, because no money is actually invested in equity positions.

IUL insurance policies offer tax-deferred cash accumulation for retirement while maintaining a death benefit. 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. IULs are considered advanced life insurance products in that they can be difficult to adequately explain and understand.

IUL Insurance Key Takeaways

  • Indexed universal life (IUL) insurance lets the policyholder decide how much cash value to assign to either a fixed account or an equity-indexed account.
  • IUL insurance policies offer a number of well-known indexes, such as the S&P 500 or the Nasdaq-100. IUL insurance policies offer the possibility of cash accumulation while still providing a death benefit.