Indexed Universal Life (IUL) is a life insurance product designed to protect your loved ones or business and provide supplemental TAX-FREE retirement income if you need it.

What do we mean by indexed universal life?

Indexed universal life is a type of policy that combines the protection of life insurance with the potential to grow cash value (policy value) through index strategies.

Index strategies are options within the policy in which growth is linked to the performance of a market index. You can experience the potential growth of a rising market, but not the losses of a negative one, as your money is not actually in the market.

I want to provide as much money as possible to my family if something happens to me.
  • An IUL can provide a death benefit (the amount you leave to your beneficiaries) that is generally free of federal income tax to help preserve their lifestyle after you’re gone.
  • If the policy is properly structured in a trust outside of your estate, the proceeds are generally free of federal estate taxes.
I want my money to grow.
  • The portion of your premium not used to cover insurance costs, riders or charges can grow through various index strategies, a fixed account, or a combination.
  • If the market index you choose goes up, your policy value will likely increase, but you will never lose money in an index segment because the index declines. This is because your money is not directly invested in the market, so you have no downside risk—only upside potential (which may be subject to a cap).
  • Many company products offer bonuses similar to a “persistency bonus” that adds on to the credit applied to your index segments and the interest applied to amounts in the fixed and holding accounts. This means your policy value may increase.
  • Also available with different companies, every eight-year period, the “lookback guarantee” means your policy value may increase if index segment returns are not at least 2% per year, cumulatively.
I want access to my money when I need it.
  • You can access your policy value through a combination of withdrawals and two types of loans. These withdrawals and loans are not generally subject to federal income tax as long as your policy remains in force.
  • Withdrawals are available after the first policy year. You should always consult with your attorney or tax advisor before taking loans or withdrawals.
What if my situation changes, but I still want to keep the policy active?
  • If you don’t want to pay your premiums out of pocket, you can pay them with the policy value —provided there is enough money to cover them. However, this could reduce the death benefit.
  • You can increase or decrease the death benefit to match your personal situation.
I don’t want any surprises.
  • The interest you earn may be limited by a “cap” the top amount you can earn in an index segment term.
  • The interest you earn may be limited by a “cap” the top amount you can earn in an index segment term.
  • Index caps may change, but once your money is allocated to an index segment, your index cap will not change for that segment term.
  • There may be years where you earn no interest if the index you choose doesn’t increase or it declines. But you will never lose money in an index segment due to market declines.
  • There may be charges associated with various policy options (“riders”) you may decide to add.
  • If you decide to cancel your policy, you will receive your net cash surrender value.
  • Skipping premiums, reducing the amount of premiums paid, and taking loans and withdrawals may negatively affect your policy.
  • Certain indexing strategies can incur an additional charge.
This is a general overview of an Indexed Universal Life IUL so you can get a sense of whether it might work for you. This is not a complete description.
Speak with your Fidelity Mutual Financial Advisor for a more complete description of this product