Index Universal Life Insurance Calculator
Test how an index universal life (IUL) policy could grow. Enter the premium, charges, cap, floor and participation rate from your illustration to see the cash value in a floor, cap and your own scenario.
How this IUL calculator works
An index universal life policy links part of its cash value growth to a stock market index, without investing directly in it. Each year the insurer credits an index rate that is limited by a cap at the top and a floor at the bottom. This calculator applies that rule year by year using the numbers you enter.
The inputs
- Cap rate: the highest rate the policy credits in a year.
- Floor rate: the lowest rate credited, often 0 percent.
- Participation rate: the share of the index gain that counts.
- Yearly charges: the cost of insurance and fees taken from the policy.
What you will see
The results show the cash value at the end of your chosen number of years if you earn your assumed index return, if the floor is credited every year, and if the cap is credited every year. The gap between those cases is the range of outcomes to expect, and the floor case shows that charges can leave little growth in weak years.
Use it with your illustration
This is a simplified hypothetical. Real policies have charges that change with age, surrender charges and caps that insurers can adjust. Ask for a full illustration and compare it with permanent policies on our whole life insurance calculator or with plain cover on our term life insurance calculator. To size cover first, use the life insurance calculator.
For education only; not insurance, tax or investment advice. Index returns are not guaranteed.
Frequently asked questions
How does an index universal life policy earn interest?
The insurer credits a rate linked to an index, limited by a cap and floor, and multiplied by a participation rate. The policy does not invest directly in the index.
What happens to an IUL when the market falls?
The floor sets the lowest credited rate, often 0 percent, so the cash value is not reduced by the index. Policy charges are still deducted, so it can shrink in weak years.
What is the cap rate on an IUL?
It is the highest rate the policy will credit in a year, whatever the index does. Insurers can change caps, so check your contract.
Is this calculator a policy illustration?
No. It is a simplified projection for comparison. Use an insurer illustration for decisions.
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