What is IUL? A plain-English explainer

Indexed universal life, or IUL, is permanent life insurance. It pays a death benefit to your family whenever you die, as long as the policy stays in force, and it builds a cash value account you can use while you are alive.

Where your premium goes

Each payment splits in two. Part covers the cost of insurance and policy fees. The rest goes into your cash value.

What "indexed" means

Your cash value is not invested in the stock market. Instead, the insurer credits interest based on how an index, like the S&P 500, performed. Good years earn more, up to a cap. Down years earn 0%, not a loss.¹

The flexible part

Within limits, you can pay more in good months and less in slow ones. But a policy that is underfunded for too long can lapse, so a steady amount matters.

Who it fits

People with steady income, a long time horizon, and a reason to want lifelong coverage plus savings. It is a poor fit if money is tight month to month or you will need the cash within a few years.