What is the biggest difference between Indexed Universal Life and variable life insurance?
Indexed Universal Life policy cash value is not invested in the stock market, and there is no direct link like there is with variable life products. Indexed UL uses the S&P 500 Index as a measuring stick, of sorts. The percentage of increase in the S&P 500 Index – subject to a cap rate – is added to the cash value of the policy. It’s that simple. Indexed Universal Life policies do not participate in the market losses (no negative interest to your policy). The index point from which index growth is measured is reset prior to each new measuring period – at the level where the index finished the prior measuring period. Therefore, if the index goes down, nothing is taken away – but the new measuring period will begin at the lowest index level. With a variable life policy, the cash value is usually invested in sub-accounts that are linked directly to the market. The cash value within the variable life policy will go up and down as the market goes up and down. While there is the potential fo
