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The most interesting thing about an IUL or Index Universal Life Insurance policy is that you are able to supercharge the cash value portion of your insurance policy. The policy creates a cash value based on the premium paid which is above the cost of insurance and other expenses and the performance of the underlying index.

One of the benefits of using IULs is that they are linked to changes in the indexed account which allows you to enjoy the ups and downs of the market while simultaneously protecting you from negative returns. So you will get up without coming down in other words. An index account in an IUL usually has a "floor" and a "cap".

Sometimes you reach a limit that can give you double digit returns in the market in a few years. Similarly, even if you still have policy charges, expenses, you will not be able to get negative credit when the market goes down. This means that when the market goes up, your money goes up but when the market goes down you are safe and your money may not get negative credit downturn in the market but still you will be charged policy charges. And there are expenses. can do.


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This can be very beneficial in times of market volatility. When the market goes up, so does your cash value, but when the market goes down, the floor starts from here and you'll get credit for anything, but you're protected from that loss. Your money gets locked so you don't lose. However, you will have to pay policy fees and expenses, which are necessary.

Why is this so important now? Because inflation is one of the biggest threats to your money growing and what if inflation is running at 3 to 5% or even higher depending on the monetary policy of the government? It is important that your money exceeds inflation. If your money is moving slower than the rate of inflation, you are not growing your money, it means you are actually depreciating its value over time.


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"IUL" can allow you to overtake inflation by capitalizing on potential growth in years when the market is going up. Your indexed universal life policy will have a cash value increase associated with the "S&P 500" but your cash is not actually invested directly in the market. Your money is protected from any market losses, as it does not go directly to the market, but at the same time you can profit from growth up to the limit of the "S&P 500".

For example the upside cap is 12%. It varies from policy to policy. This means that the cash value growth will be limited to only 12%. Having a cap can actually be a good thing, as this is what allows insurance companies to protect against losses in years when the market is down.

Now you'll be able to grow your money when the market goes up, you'll have enough to beat inflation with potential double-digit gains and you won't even have to worry about losing money. when the market goes down. Only such peace of mind helps you to know whether your money is safe from market volatility or not?

So index strategy makes sense for those who are trying to avoid market risk but still want two or three digit profit potential, and whatever profit IUL gives them, they should use this strategy. By doing this you are able to save more money without changing your current lifestyle.

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~ author Jagbir