Universal life insurance is a form of permanent life insurance that provides flexible premiums, a death benefit, and a cash value component that grows over time.
Cash value earns interest based on the insurer's declared interest rate (with a minimum floor). Flexible premiums — you can pay more or less within limits. Coverage is permanent as long as adequate premium is paid.
Cash value growth is linked to a stock market index (commonly the S&P 500). You get upside potential when the index rises, but a 0% floor protects you from market losses. Many IUL policies include cap rates (limiting upside) and participation rates.
Cash value is invested directly in sub-accounts (like mutual funds). Higher upside potential — and higher risk. Not FDIC-insured; cash value can decrease.
IUL is popular as a tax-advantaged supplemental retirement strategy. When structured properly by an experienced agent, an IUL policy can provide tax-free retirement income through policy loans and withdrawals.
Peter can run an IUL illustration showing projected values at various growth scenarios — at no charge.