Indexed universal life insurance offers cash value growth that is tied to the movement of an underlying index but does not participate in the market.
Minimum and maximum interest crediting limits act as guardrails, which make indexed universal life less risky than variable universal life insurance, while potentially producing greater interest crediting than fixed universal life insurance.
Indexed universal life benefits
- Lifetime protection for your loved ones
- Flexible premiums allow you to adjust your payments, or you can choose a fixed, consistent amount
- Ability to adjust your benefit amount to align with your changing life
- Ability to build tax-deferred cash value growth based on indexed crediting potential tied to performance of an underlying index
- Minimum and maximum crediting rates – a "cap" and a "floor" – to provide stability
- Greater cash value potential than fixed universal life
Indexed universal life considerations
- If you do not pay enough premium, the policy may lapse
- Loans and withdrawals will impact both the death benefit and policy surrender value and may create an adverse tax result in the event of a lapse or policy surrender
- While minimum crediting floors provide stability, maximum crediting caps also restrict cash value accumulation potential
- Growth caps and participation rates can change over time as economic conditions vary
- Should the index have 0% growth or decline, policy owners bear the risk that no Index credit will be given to the account
- Adjusting benefit amounts may require new underwriting
Survivorship indexed universal life insurance provides insurance on two lives, and pays a death benefit after both insureds have passed away.
A survivorship policy may be right for you if you have an estate with significant assets, own a family business or want to provide for the continued care for a loved one with special needs.