Who May Be a Fit for Indexed Universal Life?

Understand the circumstances in which indexed universal life may warrant a closer look.

The planning principle

IUL is permanent life insurance with flexible elements and index-linked interest-crediting methods. It is not appropriate for every protection or accumulation objective.

What to review

A review should consider the need for permanent death-benefit coverage, funding capacity, time horizon, risk tolerance, policy charges and the ability to maintain the policy through changing assumptions.

Who may be a fit

• Someone with a legitimate long-term or permanent death-benefit need.
• A household with stable cash flow and the ability to fund premiums consistently over a long horizon.
• A client who understands that index-linked crediting is not direct stock-market investing and accepts policy charges and non-guaranteed elements.
• Someone willing to review policy performance periodically as assumptions, crediting terms and needs change.

Who may not be a fit

• Someone whose primary need is inexpensive temporary death-benefit protection.
• A household with uncertain cash flow, inadequate emergency reserves or high-interest debt that should be addressed first.
• Someone expecting guaranteed market-like returns, unrestricted liquidity or a short-term savings vehicle.

Key mechanics to understand

IUL cash value can receive interest under one or more index-linked crediting strategies. Crediting is governed by the policy terms and may use caps, participation rates, spreads or other limits. Policy charges continue regardless of credited interest. Loans and withdrawals can reduce values and benefits and can increase lapse risk. Heavy funding must also be monitored against federal Modified Endowment Contract limits when tax treatment is an objective.

Educational information only. This page is not tax, legal, investment, or individualized insurance advice. Insurance products are subject to eligibility, underwriting, carrier availability, policy terms and state requirements.