Tax-advantaged growth with downside protection

Premium allocation

Each premium you pay is split into three parts: the cost of insurance (which keeps the death benefit in force), policy expenses, and the remainder which goes into your cash value account. Over time, as the cash value grows, it can offset more of the cost of insurance — improving long-term efficiency.

Indexed crediting strategies

You choose how your cash value is credited. Most carriers offer one or more of these strategies, often tied to indexes like the S&P 500, Nasdaq-100, or proprietary volatility-controlled indexes:

• Annual point-to-point — measures index growth over 12 months
• Monthly average — smooths volatility across the year
• Cap rate — caps your maximum gain (e.g. 9–12%)
• Participation rate — credits a percentage of index growth (e.g. 100–140%)
• 0% floor — you earn 0% in down years, never negative

Tax-free retirement income via policy loans

Because the IRS treats properly designed life insurance loans as a return of basis (not income), you can borrow against your cash value in retirement and receive the funds income-tax-free. The loan is repaid from the death benefit at the end of life, leaving the remainder to your beneficiaries.

Living benefits (accelerated death benefit riders)

Most modern IULs include riders that let you access a portion of your death benefit early — while you're still alive — if you're diagnosed with a qualifying condition:

• Terminal illness — life expectancy of 12–24 months
• Chronic illness — unable to perform 2 of 6 activities of daily living
• Critical illness — heart attack, stroke, cancer, organ failure, etc.
• Critical injury — paralysis, traumatic brain injury, severe burns

Flexibility you control

Unlike whole life, an IUL is flexible. You can adjust the premium amount within IRS limits, increase or decrease the death benefit (with underwriting), skip premiums if your cash value can cover the cost of insurance, and reallocate between fixed and indexed accounts each year.