Indexed Universal Life (IUL)
A type of permanent life insurance that earns interest based on the performance of a market index, such as the S&P 500, while providing a guaranteed minimum floor (typically 0%) to protect against losses.
Understanding Indexed Universal Life (IUL)
IUL policies allow policyholders to build cash value on a tax-advantaged basis. The cash value grows based on index credits, and policyholders can access funds through tax-free policy loans. Unlike direct market investments, IUL provides a floor that protects against negative returns. Growth is subject to cap rates set by the carrier.
Why This Matters for Retirement: Understanding Indexed Universal Life (IUL) is essential for making informed decisions about tax-free retirement income strategies. Whether you are evaluating an IUL policy, planning Roth conversions, or comparing retirement vehicles, this concept directly affects your outcomes.