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Indexed Universal Life: Permanent Coverage With Flexibility
Permanent coverage with a cash-value component linked to a market index, subject to caps, fees and policy terms.
What it is
Indexed Universal Life in plain language.
Permanent life insurance with flexible premiums and a cash-value component. Interest credited to the cash value is linked to the performance of a market index, within limits set by the policy.
What it does not do
It is not a direct investment in the stock market, and results are not guaranteed beyond what the policy states. It is not a substitute for retirement accounts or for advice from a financial or tax professional.
Who might consider it
People who want permanent coverage and are prepared to understand a more complex policy with moving parts.
How it generally works
You can usually adjust premium payments within policy limits. Credited interest follows an index up to a cap, typically with a floor that limits the effect of index declines. Policy charges are deducted whatever the index does.
Premiums and eligibility are set by the insurance carrier, usually based on factors such as age, health, the amount of coverage and the features of the policy. Some policies require a medical exam and others rely on health questions; requirements vary by carrier.
Worth knowing
An IUL is life insurance, not a direct investment in the market. Caps, participation rates, fees and charges affect results, and a policy can lapse if it is not funded adequately.
Common questions
Indexed Universal Life: questions people ask.
Can an IUL lose value?
The cash value can decline, because policy charges continue even in years when little or no interest is credited. If a policy is underfunded it can lapse.
Who is an IUL not suited to?
People who want simple, lower-cost coverage, or who do not want to monitor and fund a policy over time, may be better served by other options.
What happens if I pay less than planned?
Flexible premiums are a feature, but paying too little can cause the cash value to fall short of the policy charges, and the policy can lapse. Regular reviews matter.
Have a question about indexed universal life that is not answered here?
Keep reading
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Whole Life
Permanent coverage designed to last a lifetime, with premiums and features defined by the policy.
Read the guide → SolutionRetirement Income
Insurance-based options, such as annuities, that some people consider when planning retirement income.
Read the guide →Last updated November 2026. Reviewed by [Licensed reviewer name and credentials]. Product availability varies by state and carrier. All coverage is subject to carrier underwriting and approval; features, premiums, exclusions and riders depend on the specific policy. This page is general education, not a recommendation for your situation.
Important information. This page describes a type of insurance in general terms. It is not a description of any specific policy. Benefits, premiums, exclusions, limitations and riders depend on the policy issued and vary by carrier and state. Read the policy for full details. Guarantees are backed by the claims-paying ability of the issuing insurance company. Indexed universal life insurance is not an investment in the stock market or in any index. Interest credited is subject to caps, participation rates and other limits set by the carrier, which may change. Policy charges apply in every year. A policy that is not funded sufficiently may lapse. Policy loans and withdrawals reduce the cash value and death benefit and may have tax consequences. DNA Life & Legacy and its agents do not give tax or legal advice. Please consult your own tax or legal professional about your situation.
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