IUL is permanent life insurance with cash value. The cash value growth is tied to a stock index, like the S&P 500, instead of you picking investments.
Who it fits
People who already have the coverage they need, can pay higher premiums for many years, and understand the fees and limits.
- Who buys it
- Ages 18 to 70
- Medical exam
- SometimesDepends on age, amount and company
- Ages
- Universal life usually runs to a maturity date at age 95 or 100, as long as there is cash value.
What to know before you buy
Caps and participation rates limit how much of the index gain you get. Ask what they are now and how often they can change.
The cost of insurance and other charges are taken out of your account value.
Projections are not a promise. You could earn less than shown.
If the cash value runs out, the policy can end unless you pay more.
Universal life policies may charge you to cash out, often for about 10 years and sometimes up to 20.
Regulators warn that holding these for a short time is not in the buyer's best interest.
Common questions
Can I lose money in an IUL?
Fees and charges come out of your cash value. If gains are low, the cash value can shrink and the policy can lapse.
Is the illustration guaranteed?
No. Projections are not a promise. You could earn less than shown. Ask to see the guaranteed values.
What is a cap?
A cap is the most the policy will credit in a period, even if the index goes up more.
Can I cancel?
You get a free look period, at least 10 days, for a full refund. After that, surrender charges may apply.
