What is a index universal life insurance?
Quoting Glenn E. Stevick Jr., CLU, ChFC, LUTCF Equity-indexed universal life insurance, or indexed universal life insurance (IUL), is permanent life insurance that offers all the benefits of universal life with accumulation values tied to a stock market index. An EIUL policy has a fixed interest rate component as well as an indexed account option. Whereas traditional UL may credit 4 percent to 6 percent, EIUL has the ability to receive index-linked gains as high as 18 percent or more. In years in which the index does well, interest-crediting rates will rise, and in years in which the index performs poorly, interest crediting will fall. The policyowner can reap the rewards of stock market-type gains and be protected with minimum-guaranteed interest rates in case of stock-market losses. EIUL otherwise has all of the typical features of traditional UL and operates under the same policy mechanics. The major difference with EIUL is the option to participate indirectly in the upward movement
