Life Insurance & IUL

A type of permanent life insurance that combines lifelong coverage with a cash value component whose growth is tied to a market index, such as the S&P 500, rather than invested directly in it. Gains are subject to a cap that limits your upside and a floor (usually 0%) that protects against market losses. It offers flexible premiums and a death benefit, but fees and caps can eat into returns, making it more complex than term life insurance.

An indexed universal life insurance policy deliberately structured to hold the minimum death benefit while putting in the maximum premium the IRS allows before it becomes a Modified Endowment Contract (MEC). The goal is to prioritize cash value growth over the death benefit, maximizing the tax-advantaged savings component. Staying under the MEC limit is what preserves the policy’s favorable tax treatment on withdrawals and loans.