Indexed Universal Life Insurance is a type of permanent life insurance coverage. When you buy a policy, you’re covered for the rest of your natural life as long as your premiums are paid. When you pass away, the policy pays out a death benefit to your beneficiaries. During your lifetime, an IUL insurance policy can accumulate cash value. Part of the premiums you pay are allocated to a cash-value account. That account tracks the performance of an underlying index, such the S&P 500 Composite Price Index. As the index moves up or down, the insurance company credits the cash value portion of your policy each year with interest. Indexed universal life insurance allows you to secure a death benefit for your loved ones while accumulating cash value that you can borrow against which can make a substantial difference in the amount of money you’ll have when you retire.

Cash value that accumulates inside an IUL insurance policy grows tax-deferred.  With an indexed universal life insurance policy, you can borrow against the cash value at any time. You’ll pay no capital gains tax on loans and no penalties unless you surrender the policy completely or fail to repay what you borrow. Any loans left unpaid at the time you pass away are deducted from the death benefit and as always, the benefit passes to your beneficiaries tax-free.