Indexed universal life (IUL) is flexible-premium permanent life insurance that credits interest to the policy accumulation value based on an external index, subject to caps, spreads, or participation rates, while guaranteeing a floor (often 0%) against negative index returns. IUL provides adjustable death benefits, premium flexibility, and potential for tax-advantaged policy loans and withdrawals if designed and funded appropriately. Performance depends on carrier renewal practices and policy charges; it is not directly invested in the index or equities.

Advisors design IUL for protection and potential accumulation, stress testing with conservative renewal assumptions and clear loan strategies. Annual in-force updates keep funding aligned with objectives and prevent erosion from charges.