2024 Q4 IUL Update: Performance of Major Indices

The S&P 500 soared to multiple consecutive record highs in 2024, delivering strong growth in cash values for policyholders with Indexed Universal Life (IUL) insurance policies linked to this benchmark. Over the past year, the S&P 500 has risen by around 19%, which has delivered higher crediting rates within IUL plans. This upward trajectory not only boosts the cash value growth within these policies but also enhances financial security with the new zero floor reset lock in and creates additional avenues for tax-advantaged growth.

Meanwhile, the tech-heavy Nasdaq has performed even more impressively, propelled by strong gains in technology stocks. Policyholders whose IUL policies are tied to the Nasdaq may benefit from even larger gains due to this market’s recent successes.

S&P 500 Reaches New Highs

Approximate 12-Month Performance: +19%

• Overview: The S&P 500 continued its rally through the end of 2024, buoyed by strong earnings across multiple sectors—including technology, consumer staples and healthcare. Policyholders of Indexed Universal Life (IUL) insurance linked to the S&P 500 stand to benefit from these gains with high crediting rates and enhanced cash value growth.

• Key Implication: A robust S&P 500 performance can translate into greater long-term value within IUL policies, as well as more flexibility for policyholders looking to leverage their cash value for various financial needs.

Nasdaq 100’s Strong Performance

Approximate 12-Month Performance: +26%

• Overview: Tech stocks kept up their momentum in Q4 2024, propelled by increased consumer adoption of digital platforms and ongoing corporate IT investments. As a result, the Nasdaq 100 enjoyed another period of solid gains.

• Key Implication: For policyholders with IUL products linked to the Nasdaq 100, continued outperformance in the technology sector may yield compelling cash accumulation, providing an attractive growth edge within a policy’s diversified portfolio.

S&P 500 Sharia Index Performance

Approximate 12-Month Performance: +18%

• Overview: Much like its conventional counterpart, the Sharia-compliant S&P 500 Index remained on an upward trajectory, reflecting broad market resilience while still adhering to Islamic investment principles (excluding non-permissible industries).

• Key Implication: Policyholders with IULs linked to the S&P 500 Sharia Index enjoy the dual benefits of ethical alignment and positive market performance, resulting in potentially favourable crediting rates and stronger long-term policy values.

Russell 2000 Performance

Approximate 12-Month Performance: +15%

• Overview: Although smaller companies faced pockets of volatility and tighter credit conditions, the Russell 2000 maintained moderate gains through the end of 2024. Diversified consumer and industrial stocks contributed significantly to the index’s year-over-year uptick.

• Key Implication: For IUL policyholders linked to the Russell 2000, this performance underscores the growth potential of small-cap companies—though volatility may be higher. Over the long term, strong small-cap performance can enhance cash value accumulation in an IUL.

Hang Seng Index Performance

Approximate 12-Month Performance: +10%

• Overview: Despite lingering global economic uncertainties, the Hang Seng Index rebounded in late 2024, helped by stimulus measures in Asia and a gradual recovery in consumer spending.

• Key Implication: IUL policies tied to the Hang Seng Index offer exposure to major Asian companies. This geographic diversification can help policyholders capture growth opportunities from emerging markets, adding another dimension to their policy’s overall performance.

EURO STOXX 50 Performance

Approximate 12-Month Performance: +13%

• Overview: The EURO STOXX 50 posted steady gains across banking, consumer staples, and industrials in Q4 2024, reflecting the continued economic recovery in Europe and improved corporate earnings.

• Key Implication: For those with IUL policies linked to the EURO STOXX 50, exposure to large-cap European equities can offer balanced growth and diversification, enhancing the policy’s potential for steady, long-term appreciation.

Summary

The end of Q4 2024 saw a continued upswing in global equity markets, with indices such as the S&P 500, Nasdaq 100, S&P 500 Sharia Index, Russell 2000, Hang Seng Index, and EURO STOXX 50 all showing positive year-over-year performance. For Indexed Universal Life (IUL) insurance policyholders, these gains may mean higher crediting rates, stronger cash value accumulation, and greater financial flexibility. The diversity of these indices—spanning sectors, market capitalisations, and regions—can help fortify IUL strategies, leveraging broader market strengths for long-term policy growth.

Disclaimer

This article is authored by Carlton Crabbe, Chief Executive Officer of Capital for Life, a specialist indexed universal life insurance broker. The information provided in this article is for educational and informational purposes only and should not be construed as financial or investment advice. While the author possesses expertise in the subject matter, readers are advised to consult a qualified financial advisor before making investment decisions or purchasing life insurance products.