What is an IUL?

IUL, or Indexed Universal Life, is a Permanent Life Insurance policy, which means it doesn’t expire and lasts until you reach 120 years old. Within the policy, there are two different components: the Death Benefit side and the Living Benefits, which pay out a large, tax-free sum to your beneficiaries when you pass away, or to you if you’re diagnosed with a chronic or terminal illness. But it also has the cash value component, which acts like an internal savings account.

When you contribute money to an IUL, imagine putting your money into two different baskets. One basket covers the insurance expenses and policy costs, while the other goes into your cash value. So, the more money you put into the IUL, the more can go into that "savings account." I say this in quotes because a big part of this decision lies with the agent structuring the policy. If the agent puts most of your money into the wrong basket, you could end up with more life insurance than you need and less savings, or if your priority is ensuring your family is well-protected, it might not make sense to put most of your money into the savings basket.

So, how does the money grow in an IUL?

The way the money grows is by being tied to a stock market index, meaning the stock exchange. Over the long term, it generates returns averaging between 5% and 8%, though there will be years where you earn more and years where you earn less. Most importantly, your money is protected by a 0% floor. That means, no matter how badly the global economy performs, or how much the stock market drops, your money will never lose value.

Get in contact with us so we can help you design the perfect IUL to protect you, your family, and your finances.