Buy enough life insurance to replace 10–15 years of income.

“Indexed Universal Life is permanent life insurance that builds cash value based on the stock market index, but you don’t lose money when the market goes down. Later in life, you can borrow from the policy for retirement income while still leaving a death benefit to your family.”

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Indexed Universal Life (IUL) is a type of permanent life insurance that:

1. Lasts your entire life

2. Builds cash value

3. Cash value grows based on a stock market index (like the S&P 500)

4. Has a death benefit

5. Has living benefits

It’s often used for:

• Retirement income

• Tax-free loans later in life

• Wealth building

• Life insurance protection

How IUL Works (Simple)

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When you pay your premium:

• Part goes to life insurance cost

• Part goes into cash value

• Cash value grows based on a stock market index

• There is usually a floor and a cap

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Floor and Cap Example:

• Floor = 0% (you don’t lose money when market drops)

• Cap = 10% (maximum you can earn in a year)

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So:

• Market goes up 8% → You get 8%

• Market goes up 15% → You get 10% (cap)

• Market drops −20% → You get 0% (floor)

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This is why people call IUL:

“Market upside with downside protection.”

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Living Benefits of IUL

IUL policies often include:

• Cash value growth

• Policy loans

• Retirement income (tax-free loans)

• Accelerated death benefit

• Critical illness benefit

• Chronic illness benefit

• Long-term care rider

This is why many agents call IUL:

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“Life insurance + retirement + living benefits.”

Example IUL Strategy

Example:

• Age 35

• Pay $500/month

• Over time cash value grows

• At age 60 you may borrow from policy

• Take $30k–$50k per year tax-free loans

• Policy still has death benefit

This is often called:
Life Insurance Retirement Plan (LIRP)

Why People Use IUL

People use IUL for:

• Retirement income

• Tax-free income later

• Wealth building

• Leaving inheritance

• Business owners

• People who max out 401k or IRA

• Estate planning

• Infinite banking strategies

Important Pros and Cons

Pros

• Lifetime coverage

• Cash value growth

• Market-linked growth

• Downside protection (0% floor)

• Tax-deferred growth

• Tax-free loans

• Living benefits

• Flexible premiums

• Retirement income option

Cons

• More complex

• Fees

• Must be structured properly

• Takes time to build cash value

• Not good if underfunded

• Needs long-term commitment

IUL must be designed correctly, or it won’t perform well.

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