---
title: "What Is IUL (Indexed Universal Life)? Definition | Epic Life Glossary"
description: "Indexed universal life (IUL) is a universal life policy whose cash value earns interest based on the performance of a market index, such as the S&P 500...."
url: https://epicline.preview.multisites.ai/glossary/indexed-universal-life
publisher: Epic Life Group
apply: https://epicline.preview.multisites.ai/apply
quote: https://epicline.preview.multisites.ai/get-a-quote
---

Policy types and products

# Indexed Universal Life (IUL)

Indexed universal life (IUL) is a universal life policy whose cash value earns interest based on the performance of a market index, such as the S&P 500. The policy owner does not invest directly in the index.

## Why it matters

IUL credits interest using a formula with limits, such as a cap or participation rate, and often a floor that prevents a negative credit in a down year. Credited returns are usually lower than the index itself. Charges, caps, and illustrated values are not guaranteed and differ by carrier. FINRA and the SEC advise buyers to read the illustration closely. Agents should explain that the cash value can be reduced by policy charges and that poor funding can cause a lapse.

Source: [investor.gov](https://www.investor.gov/introduction-investing/investing-basics/glossary/indexed-universal-life-insurance)

[Read next, for familiesIndexed universal life insurance: how it works, what can go wrong, and who it fits](https://epicline.preview.multisites.ai/life-insurance/indexed-universal-life)

## Where we use this term

-   [Captive vs independent insurance agent: who owns your book?](https://epicline.preview.multisites.ai/guides/captive-vs-independent-agent)
-   [Your first 90 days as a telesales life insurance agent: a week-by-week ramp](https://epicline.preview.multisites.ai/guides/first-90-days-as-a-telesales-agent)
-   [Indexed universal life (IUL) explained: caps, floors, costs, and risks](https://epicline.preview.multisites.ai/guides/iul-explained)
-   [Annuities explained: fixed, fixed-index, MYGA, income riders and surrender charges](https://epicline.preview.multisites.ai/annuities)
-   [How much does life insurance cost, and what drives the price?](https://epicline.preview.multisites.ai/life-insurance/cost)

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