Index Universal Life Insurance (IUL) is a type of permanent life insurance that combines a death benefit with a cash value component that grows based on the performance of a stock market index, like the S&P 500.

How It Works:

1. 1. Death Benefit: Your beneficiaries receive a tax-free payout when you pass away—just like with traditional life insurance.
   2. Cash Value Growth: A portion of your premium goes into a cash value account, which earns interest based on the performance of a market index.
      • If the index goes up, your cash value grows (up to a cap).
      • If the market goes down, your cash value is protected by a “floor” (usually 0%), so you don’t lose money—just won’t earn during that period.
   3. Flexible Premiums & Benefits: You can adjust your premiums and death benefit over time, depending on your financial situation.

Key Features:

• Tax-deferred cash value growth
• Market-linked gains with downside protection
• Policy loans or withdrawals from the cash value
• Permanent coverage (as long as premiums are paid)
• Can be used for retirement income, college planning, or emergencies

Important Considerations:

• Growth is capped (you may not get full market returns)
• Policy fees and costs can be higher than term insurance
• Must be managed carefully to avoid lapses or tax consequences

Who It’s Good For:

• People looking for lifelong coverage
• Those who want to build wealth with less risk than direct investing
• Individuals with long-term financial planning goals