NORTHMARK LEARNING ROOM / Wealth literacy
IUL: understand the policy behind the illustration.
Crediting potential is only one part of indexed universal life insurance.
Northmark Financial Services ·
What it is
Indexed universal life is a form of permanent life insurance with interest-crediting features linked to an index. The policy’s cash value is not directly invested in that index. It is an insurance contract, not a stock-market account.
What deserves attention
Ask how caps, participation rates, charges, and funding affect policy values. An interest-crediting floor does not prevent insurance charges from reducing cash value. Maintaining coverage can require additional premiums.
Illustrations are not forecasts
Non-guaranteed values in a life insurance illustration can change. Compare guaranteed and non-guaranteed columns, ask about lower-crediting scenarios, and request explanations of loan costs and lapse risk. Borrowing or withdrawing can affect policy benefits and create tax consequences in some circumstances. A policy deserves ongoing review, not just a one-time projection.
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Source: New York Department of Financial Services — Life Insurance
Additional source: NAIC — Life Insurance Illustrations
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