IUL combines life insurance with cash value growth tied to a stock market index, usually the S&P 500.
Policyholders get capped market gains (often 8%-12%) and floor protection (typically 0%) against losses.
Insurance companies use bonds and call options, not direct stock investments, to provide market-linked returns.
IULs have complex costs: admin fees, rising insurance charges, surrender penalties, and premium loads.
IULs suit affluent, sophisticated planners; most people may benefit more from term life and index funds.
