An IUL offers the potential to have interest credited based in part on the performance of an external market index, such as the S&P 500, without directly investing the policy's cash value in the stock market. When the index performs positively, interest may be credited according to the policy's specific terms, which can include features such as participation rates, caps, or other crediting methods.
Many IUL policies also include a 0% floor, meaning a negative index return generally will not result in a negative interest credit due solely to market performance. However, policy charges and expenses still apply and can reduce cash value even when the credited interest rate is 0%.
Just as important, an IUL's long-term results depend on more than the index. How the policy is designed, funded, and managed over time matters. Premium levels, insurance costs, policy charges, crediting terms, withdrawals, and policy loans can all affect cash value and the policy's ability to remain in force.
A Properly Designed IUL Can Be About More Than Life Insurance
An Indexed Universal Life policy can be designed not only to provide protection for your family, but also to build cash value that may support long-term financial and retirement goals. When properly structured and funded, that cash value may provide flexibility throughout your lifetime, including access through policy loans and withdrawals.
Want to understand how these strategies work? Register for my Free IUL Training to learn more about how an IUL may be designed for protection, cash-value accumulation, tax-advantaged retirement income, and greater financial flexibility.
