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You can trust our advisors to help you find, plan, and design the best index universal life policy possible.

You can complete our 12-step IUL questionnaire in about 60 seconds. It will help us design the perfect IUL for you. We will calculate the returns quickly.

When comparing IUL companies, you need an expert who knows the carrier products inside and out. Let us help you find the best carrier.

With an IUL, you are going to have questions.  We can answer all your questions and walk you through the entire quoting and buying process.

What is an IUL?

An IUL is an Index Universal Life Insurance policy.

As you approach retirement, you may hope to grow your savings or at a higher rate for more retirement income. Unfortunately, putting your savings in growth-oriented investments like a variable universal life policy could also put your money at risk.

So, what happens if the stock market plummets just as your retirement date arrives?

The good news is that strategies are available to attain positive market-linked returns without taking a loss when things go south. One method is using indexed universal life insurance or IUL.

Although many people shy away from insurance products, the reality is that IUL can provide you with a great deal of growth and tax-related advantages while at the same time keeping your principal safe in any market environment.

It can also offer you an additional stream of tax-free income in retirement – no matter how high-income tax rates may go in the future. So in a world filled with financial uncertainty, cash value accumulation life insurance could be well worth looking into.

How Indexed Universal Life Insurance Works

Indexed universal life is a type of permanent life insurance coverage that offers both death benefit life insurance protection for survivors and a cash value component that can help you to grow your savings by tracking the stock market indexes.

As with other types of permanent life insurance, the growth inside an IUL cash value account is tax-deferred. This means that no taxes are due on the gains, loans, or the death benefit.

What makes IULs stand apart is how the return on the cash value is credited. In this case, an underlying market index like the S&P 500 or the Dow Jones Industrial Average is tracked. (In some policies, you can track more than one index). There is typically also a fixed interest rate option available.

If the return on the chosen index(es) is positive in a given contract year, a positive return is credited to the IUL’s cash account – usually up to a set maximum, or “cap.” However, if the index performs poorly during a given contract year, a negative return is not credited to the account, which provides financial protection.

Rather, a guaranteed minimum interest rate “floor” (such as 0% or 1% minimum interest rate) is given, which not only protects your contributions and previous gains but also allows the account to build upon these gains in the future without having to first make up for any losses. This is perfect for protecting against the downside risk on market returns affecting your cash accumulations.

So, even though the positive investment return can be capped in an IUL policy’s cash value, your principal will remain safe – even during the recession of 2008 or the more recent COVID-19 crisis (and corresponding stock market downturn).

IUL Crediting Methods

Crediting methods refer to the amount of return credited to an indexed universal life policy’s index segment(s). Depending on the insurance company and the policy, some of the more common IUL crediting methods can include the following:

  • Annual Point-to-Point – The annual point-to-point method tracks changes in the underlying index from one contract anniversary to another. It will then credit the return based on that annual change.
  • Monthly Averaging – This crediting method takes the individual monthly value of the underlying index(es) and totals them. The total is then divided by twelve to determine the monthly average. In this case, the index value at the beginning is subtracted from the average to determine the positive or negative index change amount. This amount will then be divided by the beginning value to determine the percentage of interest that will be credited.
  • Monthly Sum – The monthly sum method takes the percentage of the increase (if any) in the underlying market index each month and then sums them up. In this case, the index(es) may rise or fall from one month to another. But as long as the overall percentages throughout the contract year are positive, interest will be credited to the account.

With each crediting method, the change in the value of the index(es), if any, can also be subject to a cap and participation rate.

  • Cap – A cap is the maximum rate of interest that will be credited within a given period. For instance, if the cap rate is 5%, and the underlying index has a 7% return in a contract year, then IUL’s cash account will be credited with 5%.
  • Participation Rate – The participation rate determines how much of the underlying index’s increase will be used in computing the return. For example, if the participation rate is 80%, and the underlying index returns 10% during a contract year, the account will be credited 8%. (That is because 80% of 10% is 8%). It is important to note, though, that if there is also a cap, the amount of the return credited could be affected.

The value at the end of a given period (usually each contract anniversary date) will become the new starting value for the beginning of the next period. This value is referred to as the annual reset calculation.

It is important to remember that even though there are various limits to the growth within an IUL policy, the credited interest will never be taken away – even if the underlying index(es) perform poorly in the future.

In addition, the account’s value has the benefit of continuing to grow and compound over time without having to make up for any previous losses.

Other Features of Indexed Universal Life

Many indexed universal life insurance policies offer additional features, too, such as the ability to leave a legacy for survivors through the death benefit – which is received free of income tax to the beneficiary(ies).

IUL policies may also allow for penalty-free access to the cash value funds if you have been diagnosed with a terminal illness and/or if you need to reside in a nursing home for a certain minimum period.

IUL Fees

As with other life insurance products, you may incur fees when purchasing and owning an indexed universal life insurance policy.

These could include an early surrender fee if you cancel the policy during the surrender charge period, the cost of insurance, and policy fees & expenses.

Accessing Tax-Free Income from an IUL Policy

There are different ways that the cash value from an indexed universal life insurance policy may be accessed and used to supplement the policyholder’s retirement income or other financial needs.

You can get to the cash by way of withdrawals or policy loans.


By taking a direct withdrawal, you may take tax-free withdrawals up to your contribution amount or premium payments.


You could also access funds tax-free by taking a loan. The IRS does not consider loans from life insurance cash accounts to be taxable income. Any money loaned out can still participate in the index when you choose a index loan.

Pros and Cons of an IUL

While there are many benefits to owning indexed universal life, there are also some items to consider before you commit to purchasing this type of policy. So, it is helpful to understand both the pros and cons of IUL.

IUL Pros

  • Higher return potential (as compared to whole life or regular universal life insurance)
  • Tax-free cash value build-up
  • Tax-free income
  • Death benefit “safety net” (which is received income tax-free by the beneficiary)

IUL Cons

  • Growth limitations (such as caps, participation rates, and/or spreads)
  • You have to qualify medically
  • Most agents don’t know how to design case for max accumulation

The Best IUL Insurance Companies

Many insurance companies offer indexed universal life. But some may be better than others, depending on your health condition and what you are looking for in an IUL policy (such as premium amount and choice of underlying indexes to track).

We offer IULs from over 30 companies, but these are the best IUL companies currently:

The Best

  • Allianz (the best company, hands down)

2nd Place

  • Lincoln
  • Nationwide
  • North American

One crucial factor to consider when choosing an indexed universal life policy is the financial strength and stability of the insurer. You can determine this by reviewing the ratings the insurance carrier has received from A.M. Best, Standard & Poor’s, Fitch, and/or Moody’s Investor Services.

Working with an independent life insurance agent like an Insurance Geek can help you to narrow down which IUL policy and insurance carrier is right for you. We can also help you to understand how the plan will work so that you know what to expect from your policy.

Is IUL a good investment?

Imagine if you could never lose in the stock market but could still get double digit gains each year? IUL insurance policies offer just that. By combining a life insurance policy with dynamic investment strategies, IULs protect your family’s financial future from market risk while enjoying unmatched tax benefits and cash-value growth.

One of the main benefits of IUL policies is the potential for cash value growth linked to an index’s performance, such as the S&P 500. This can allow the cash value to grow at a higher rate than traditional universal life policies or whole life insurance policies, which typically have a guaranteed, but lower rate of return. Additionally, the cash value grows tax-free, income can be taken tax-free, and the death benefit is paid out tax-free.

The cash value growth is usually capped at a certain percentage; however, some insurance companies have uncapped index options, which can vary depending on the policy and the insurance company. Ask us which carriers have uncapped indexes.

Can IUL lose money?

It’s important to note that IUL policies are not directly invested in the stock market; therefore, they do not share the same risks as a direct investment, but will reap all the upside rewards of an index. The cash value is not directly linked to the index’s performance, and the policyholder does not assume the risk of market downturns.

Additionally, it’s essential to be aware that Index Universal Life policies have fees and charges such as policy fees, administrative fees, and mortality and expense charges that can affect the cash value. These fees can eat into the cash value growth, and if not managed properly, the policy could not perform as expected or even lose value.

It’s also essential to understand the specific guarantees and protections of the policy in the case of a market downturn. All index universal life policies have zero floor, so you never lose cash value due to market downturns.

Setting Up an IUL Account

IUL policies offer several potential advantages. Specifically, it’s the only investment that can offer the Triple Tax Advantage®, including tax-free growth, income, and transfer to your heirs – this is what makes this type of financial vehicle is best investment most people have never heard of.

If you want to learn more about the retirement savings benefits of an indexed universal life account, or if you’re interested in running an IUL policy quote, you can try our IUL calculator above or contact us.

We work with more than 30 of the top-rated life insurance carriers in the industry, and we’re familiar with the available products that each one offers and their underwriting guidelines.

So, we can quickly provide the answers you need and offer sound investment advice if you’ve got questions. We look forward to hearing from you.

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