Life insurance that can also build value for later
An indexed universal life policy protects your family for life and builds cash value that is credited based on a market index. Indexed universal life is the coverage Aries Surety specializes in, and it is also the one most worth understanding before you buy.
Protection first, with room to grow
Each premium you pay does two jobs. Part of it covers the cost of the insurance and the policy's fees. The rest goes into the policy's cash value.
Instead of paying a fixed rate on that cash value, the insurer credits interest based on the performance of a market index such as the S&P 500. Two numbers shape the result. The cap is the most you can be credited in a good year. The floor, often 0%, is the least you can be credited in a bad one, so an index loss is not passed on to your cash value.
Over time that cash value can be used through withdrawals or policy loans, while the death benefit remains in place for your family.
The reasons an IUL makes the short list
Lifelong protection
Permanent coverage that does not expire at 20 or 30 years, as long as the policy stays properly funded.
Cash value growth potential
Interest tied to an index gives the cash value room to grow in strong years, up to the cap.
Downside protection
The floor means a falling index credits zero rather than a loss, which takes some of the fear out of a bad market year.
Tax-advantaged growth
Cash value generally grows tax-deferred, and the death benefit generally reaches your beneficiaries income-tax-free.
Money for retirement
Policy loans can supplement retirement income later, when the policy is designed and funded for it from the start.
A financial legacy
Whatever you use along the way, the remaining death benefit passes to the people you name.
What a good IUL conversation should always cover
An IUL can be an excellent tool in the right hands and a disappointing one in the wrong plan. Before you apply, we walk through each of these with you, in writing:
- Caps and participation rates can change. The insurer can adjust them over time within the limits the policy allows.
- Costs rise with age. The cost of insurance inside the policy increases as you get older and is drawn from the cash value.
- Illustrations are projections, not promises. Any chart of future values assumes a rate of return that may not happen.
- Underfunding can cause a lapse. Paying too little, or borrowing too much, can leave the policy without enough value to stay in force.
- Loans reduce the death benefit. Any loan balance, plus interest, is subtracted from what your family receives.
- Early exits cost money. Surrender charges usually apply for a set number of years if you cancel.
Who an IUL tends to suit, and who it does not
An IUL often makes sense for people with steady income, a time horizon of ten years or more, and the basics already handled: an emergency fund and any retirement plan match at work. It tends to suit people who want permanent coverage and are comfortable funding a policy consistently.
It is usually not the right first step if the budget is tight, the need is short-term, or the goal is simply the most coverage for the lowest price. In those cases we will point you to term life instead, and tell you why.
Is an IUL an investment?
No. It is a life insurance policy. Your cash value is not invested in the stock market; the insurer credits interest based on how a market index performs, within the cap and floor the policy sets. That is why a down year in the index does not come straight out of your account the way it would in a brokerage account.
Can the cash value go down?
Yes, even with a 0% floor. In a year the index credits nothing, the policy's monthly charges still come out of the cash value, so it can shrink. Surrender charges can also apply if you cancel in the early years. That is why an IUL needs to be funded properly and reviewed regularly.
How is an IUL taxed?
Generally, cash value grows tax-deferred, policy loans are not treated as taxable income while the policy stays in force, and the death benefit paid to your beneficiaries is generally free of federal income tax. Those advantages depend on the policy being structured and funded within IRS limits and never lapsing with a loan outstanding. Confirm your own situation with a tax professional.
How long should I plan to keep it?
Think in decades, not years. An IUL costs the most in its early years, and the benefits of cash value build slowly. If you may need the money within a few years, or you mainly want the most coverage for the lowest price, term life is usually the better tool.
See whether an IUL belongs in your plan
Tell us your age range, what you would like the policy to do and roughly what you could set aside each month. We will show you how a policy could be structured, walk through the illustration line by line, and compare it honestly with simpler options.
Indexed universal life insurance is not an investment in the stock market or in any index. Caps, participation rates, charges and guarantees vary by insurer and policy and are subject to change within contract limits. Loans and withdrawals reduce the cash value and death benefit and may cause the policy to lapse. Tax treatment depends on your circumstances and current law; consult a tax professional.