Indexed universal life insurance (IUL) is a type of permanent life insurance policy that offers flexibility, lifelong coverage, and the potential for cash value growth tied to the performance of a market index, such as the S&P 500. Indexed universal life insurance combines the death benefit protection of traditional life insurance with the potential for higher returns based on market performance, making it an attractive option for individuals seeking both insurance coverage and investment opportunities.

Features of Indexed Universal Life Insurance:

1. Lifelong Coverage: Indexed universal life insurance provides coverage for the entire lifetime of the insured, as long as premiums are paid. This ensures that your loved ones will receive a death benefit payout when you pass away, providing financial security and peace of mind.

2. Flexible Premiums: Indexed universal life insurance policies offer flexibility in premium payments, allowing you to adjust the amount and frequency of premium payments to suit your financial needs and circumstances. This flexibility makes it easier to adapt your coverage to changes in your life, such as fluctuations in income or expenses.

3. Cash Value Accumulation: Indexed universal life insurance policies include a cash value component that accumulates over time on a tax-deferred basis. A portion of your premium payments goes towards building cash value, which can grow based on the performance of a market index, such as the S&P 500. This provides the potential for higher returns compared to traditional whole life insurance policies.

4. Indexed Interest Crediting: The cash value of an indexed universal life insurance policy is credited with interest based on the performance of a market index, such as the S&P 500. While the policy's cash value is protected from market downturns, it has the potential to benefit from market upswings, offering the opportunity for greater growth compared to traditional fixed interest rate policies.

5. Floor and Cap Rates: Indexed universal life insurance policies typically include floor and cap rates that limit the downside risk and upside potential of the indexed interest crediting. The floor rate ensures that your cash value will not decrease due to poor market performance, while the cap rate sets a maximum limit on the interest credited to your cash value.

6. Policy Loans and Withdrawals: Indexed universal life insurance policies offer flexibility in accessing the cash value through policy loans or withdrawals. Policyholders can borrow against the cash value or make withdrawals to supplement income, fund education expenses, or cover other financial needs, providing a source of liquidity and financial flexibility.