What is IUL (Indexed Universal Life)

IUL stands for indexed universal life insurance. It is a type of permanent life insurance that provides death benefit protection and cash value accumulation. The cash value of an IUL policy can accumulate based on the performance of an index, such as the S&P 500, rather than being tied to the performance of a fixed interest rate. IUL policies typically have a cap and floor on the interest rate credited to the cash value, which helps to limit the policyholder's downside risk. Additionally, some IUL policies offer an option to participate in the gains of the underlying index while providing downside protection. They are designed to provide a balance between growth potential and safety of principal.

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