Indexed Universal Life (IUL) insurance differs from traditional fixed Universal Life (UL) PRIMARILY because:

Explanation

An Indexed Universal Life (IUL) policy credits interest to the cash value based on a formula tied to an external market index (e.g., S&P 500), but the cash value is NOT actually invested in the market. The formula typically includes a participation rate (e.g., 100%), a cap (e.g., 9%), and a floor (e.g., 0% or 1%), so the policyowner shares in upside while being protected from index declines below the floor. Because IUL is NOT a variable product, it is regulated under California Insurance Code §10168 by the CDI rather than as a security by the SEC, and no securities license is required to sell it (only the life-only license). The description of an SEC-registered contract invested directly in mutual fund subaccounts with the owner absorbing market losses is Variable Universal Life. The claim that IUL premiums are personally deductible and the credited index interest currently taxable is wrong; life premiums are never personally deductible. And the guaranteed death benefit rising every year with published inflation at the insurer's expense fabricates a guarantee that IUL does not provide.