Indexed universal life (IUL) is a permanent life insurance product with two parts: a death benefit and a cash-value component. The interest credited to the cash value is based in part on the performance of one or more market indices — but you are not investing directly in an index or in the market.
IUL is a flexible but complex product. How it performs depends on the carrier's caps, participation rates, and charges, all of which can change over time. Because of that complexity, it should be reviewed carefully with a licensed agent using a carrier-approved illustration.
How index crediting works
The diagram below shows the shape of index crediting only — it has no numbers and is not a projection. A cap limits how much interest can be credited in a period; a floor (commonly 0%) means credited interest doesn't go below a set minimum even when the index falls.
Index movementInterest credited to cash value
Conceptual illustration only. Actual caps, floors, participation rates, and charges are set by the carrier and may change. This is not a projection of results.
What it can do / what it can't
We put the limitations in writing because that's how you make a good decision.
What it can do
✓Provide permanent death-benefit protection
✓Build cash value with index-linked crediting subject to a cap and floor
✓Offer flexible premiums within policy limits
✓Include optional living-benefit riders in some cases
What it can't do
–Let you invest directly in the market or an index
–Guarantee cash-value growth — the 0% floor applies to credited interest only
–Prevent cash value from declining due to policy charges and cost of insurance
–Preserve the full death benefit if loans or withdrawals go unmanaged
Who tends to consider IUL
•People who want permanent coverage plus a cash-value component and understand the trade-offs
•Those comfortable with a more complex product that requires ongoing review
•Individuals who have already secured foundational protection and are exploring additional options
Common questions
Am I investing in the stock market?▾
No. Your cash value is not invested directly in an index or the market. Interest is credited based in part on index performance, subject to a cap and a floor set by the carrier.
Does the 0% floor mean my cash value can't go down?▾
No. The floor applies to credited interest only. Cash value can still decline because of policy charges, cost of insurance, loans, or withdrawals.
Can the caps and rates change?▾
Yes. Caps, participation rates, and charges are set by the carrier and can change over time within the terms of the contract. This is one reason IUL should be reviewed regularly.
How do I see real numbers for my situation?▾
A licensed agent will prepare a carrier-approved illustration based on your specific details. That illustration — not a webpage — is the right place to review potential values.
Indexed universal life insurance is a permanent life insurance product with cash value that may be credited interest based in part on the performance of one or more market indices. You are not investing directly in an index or in the market. The 0% floor applies to credited interest only and does not prevent declines in cash value resulting from policy charges, cost of insurance, loans, or withdrawals. Caps, participation rates, and charges are set by the carrier and may change. Policy loans and withdrawals reduce the cash value and death benefit and may have tax consequences. This page is educational and is not a policy illustration, a recommendation, or an offer of coverage. A personalized, carrier-approved illustration will be provided by a licensed agent before any purchase. Guarantees are based on the claims-paying ability of the issuing carrier. Full American Financial is an independent insurance agency. Bryson H Jones, licensed in Florida, license #W234699.
