Life Insurance FundamentalsQuestion 129 of 315
What feature of an indexed universal life (IUL) policy protects the policyowner from a market downturn?
a.FDIC insurance on cash value
b.Direct ownership of S&P 500 shares
c.A guaranteed double-digit return
d.The guaranteed floor on credited interest, often 0%
Explanation
IUL credits interest based on the performance of an index but always subject to a guaranteed floor — commonly 0% — so the policy's cash value cannot lose value if the index drops. The trade-off is a cap that limits how high the credited rate can go.
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Sen Lin, PrepPass Founder · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)