Indexed Universal Life vs Index Fund

The main difference between IUL and index funds is their fundamental purpose and risk profile. IUL is primarily a life insurance product with a cash value component that can grow based on the performance of stock market indices but with annual caps and a 0% floor to limit downside market risk. Index funds, on the other hand, are pure investment vehicles that directly track the performance of a specific market index, offering the potential for higher returns but also carrying greater market risk. IUL provides a death benefit alongside potential cash value growth, whereas index funds focus solely on investment growth.