Indexed Universal Life
Permanent coverage that flexes with your income and links growth to a market index.
What it is
Indexed universal life is permanent insurance with a savings component credited against the movement of a stock index, most often the S&P 500. You are not invested in the index — the insurer credits interest using a formula written into the contract.
That formula carries a floor, so a down year does not take money out of your cash value, and a cap, which limits what can be credited in a strong year. Premium timing and the death benefit can be adjusted within contract limits.
What it does
- Provides coverage for your entire life as long as the policy is funded properly.
- Lets you raise, lower, pause or skip premiums within contract limits when your income changes.
- Credits growth linked to an index with a downside floor, and that cash value can be borrowed against or withdrawn.
- Allows the death benefit to be adjusted as your obligations grow or shrink.
- Can be structured for estate planning, business succession, or supplemental retirement income.
Who it fits
- Higher earners who have already maxed out other retirement accounts and want another tax-deferred bucket.
- People with uneven income — business owners, commissioned workers — who need room to flex premiums.
- Anyone who wants a permanent death benefit plus a shot at index-linked growth, and understands the cap.
Things to weigh
- Credited interest is limited by a cap or participation rate — it is not the same as owning the index.
- An underfunded policy can lapse, so it needs review as the cost of insurance rises with age.
- Caps and participation rates are set by the carrier and can change, so an illustration is not a promise.
- Loans and withdrawals reduce the death benefit while they are outstanding.
- Surrender charges apply in the early years of the contract.
Common questions
Can the market take my money?
Not directly. The floor means a negative index year credits nothing rather than subtracting from your cash value. The trade-off is the cap, which limits what is credited in a strong year.
Is this an investment?
It is insurance with a savings component. Interest is credited by formula, you do not own the index, and part of every premium pays the cost of insurance — which is why we review the policy on paper each year.
When does this make more sense than whole life?
When your income moves around and you want control over premium timing and coverage, and when you are comfortable trading some guarantee for that flexibility. We price both and show you the difference before you decide.
Not sure if iul is right for you?
A consultation takes about twenty minutes, costs nothing, and looks at your actual situation before anything is recommended.
Also worth a look
Term Life Insurance
Affordable coverage for a specific period, providing essential protection when your family needs it most. Perfect for covering mortgages, education expenses, and income replacement during your working years.
Whole Life Insurance
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Annuities
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