Sub-Accounts

Sub-accounts refer to the distinct divisions within the policy's cash value component where the policyholder can allocate their premium payments for investment. Unlike variable universal life insurance, IUL policies do not directly invest in equity markets but rather track a specific market index, such as the S&P 500. The sub-accounts in an IUL policy are essentially interest-earning accounts that are credited with returns based on the performance of the chosen index, subject to a cap and floor. This allows policyholders to potentially earn higher returns compared to traditional whole life insurance while still having a level of protection against market downturns.