What is IUL life insurance?

IUL (Indexed Universal Life) insurance is a type of permanent life insurance that combines a death benefit with a cash value component that earns interest based on the performance of a market index, such as the S&P 500. Unlike variable life insurance, IUL does not invest directly in the market — instead, it credits interest based on index performance, subject to a cap (maximum interest credited) and a floor (minimum interest credited, typically 0%). This means the cash value can grow when the market performs well but is protected from losses when the market declines. IUL is commonly used for tax-free retirement income planning, wealth transfer, and death benefit protection. Premiums are flexible, and policyholders can access cash value through policy loans, which are generally tax-free.