Premium

In Indexed Universal Life (IUL) insurance, the Premium is the payment made by the policyholder to the insurance company for maintaining coverage. Characteristics of premiums in IUL policies:

• Flexibility: Allows adjustment in the amount and frequency of payments within specified limits.
• Allocation: A part of the premium covers the cost of insurance (COI), administrative fees, and other charges. The remainder contributes to the policy's cash value.
• Cash Value Growth: The accumulated cash value can grow based on a chosen stock market index's performance, within the bounds of a cap and floor.

Understanding the structure and allocation of premiums is vital for policyholders to effectively manage their IUL policy's coverage and investment potential.