Indexed Universal Life vs Universal Life

The main difference between IUL (Index Universal Life) and UL (Universal Life) is in how their cash value grows. IUL links its cash value growth to the performance of market indices like the S&P 500 or Nasdaq, offering the potential for higher returns but also carrying market risk. UL credits interest to the cash value based on the insurer's current interest rate, which fluctuates over time. IUL typically has capped increases, typically 11% a year, but a 0% floor to protect against stock market losses in down markets. UL's cash value can decrease if the credited interest rate falls below the cost of insurance.