The Wolle Agency · Insurance guide
Understanding indexed universal life
IUL is a type of permanent life insurance. It takes a careful discussion of costs, guarantees, and long-term funding.
How it works
An indexed universal life policy includes a death benefit and cash value. Interest credits may be linked to an index formula, subject to policy caps, participation rates, spreads, and floors. Cash value is not directly invested in the index.
The costs still matter
A zero-percent interest-crediting floor does not mean cash value cannot decline. Insurance charges and other fees still apply. Non-guaranteed terms may change, and insufficient funding can cause a policy to lapse.
Loans and withdrawals need care
Accessing cash value can reduce available values and death benefits. Loans accrue interest, and a lapse or surrender with an outstanding loan can have tax consequences. IUL is not a guaranteed retirement income plan.
Review both sides of an illustration
Ask to see guaranteed and non-guaranteed values, the funding needed to keep the policy in force, and how lower crediting would affect the plan. Talk with your tax adviser before relying on a tax strategy.