Welcome to Talk Money to Me, where we break down the biggest financial questions in ways that actually make sense. Today’s episode? We’re diving into one of the most misunderstood tools in life insurance: Indexed Universal Life Insurance—or IUL for short.

What is an IUL? An IUL is a type of permanent life insurance that combines two key features: a death benefit for your loved ones and a cash value account that earns interest based on a market index—like the S&P 500. Here’s the twist: your money isn’t actually invested in the market. It’s linked to the performance of the index, giving you upside potential without direct downside risk.

How Growth Works Each year, your cash value can grow based on how the market index performs. Most IULs have a cap and a floor. For example, if your cap is 10% and the index goes up 15%, you earn 10%. If the market drops -20%, your policy might have a 0% floor—so you don’t lose anything.

Flexibility and Use Cases IULs offer flexible premium payments, potential tax-free income, and living benefits. People use them for retirement income, college savings, and even emergency liquidity.

So how does IUL really work? It gives you long-term protection, market-linked growth potential, and tax-advantaged income—all in one policy. Not bad for something that flies under most people’s radar.

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