Indexed Universal Life (IUL): Tying Cash Value to Market Indexes

Indexed Universal Life insurance links cash value growth to the performance of a market index, like the S&P 500, providing a blend of growth and security. Here’s how it works:

• Growth Cap and Floor: IULs typically have a growth cap (maximum return rate) and a floor (minimum return rate). This means you’ll benefit from market gains up to a certain limit, while the floor protects you from losing money in downturns.
• Flexible Premiums: IUL policies allow you to adjust premiums and death benefits within certain limits, which can be helpful if your financial needs change.
• Investment Strategy: Since the cash value is tied to an index, IULs have more growth potential than traditional whole life policies. However, the fees can be higher, so it’s important to review the policy’s cost structure carefully.