What Is an Indexed Universal Life (IUL) Policy?

An Indexed Universal Life (IUL) insurance policy is a permanent life insurance strategy that offers lifetime protection, potential cash value growth linked to a market index, and downside protection from market losses. Unlike direct market investing, IULs credit interest based on index performance while protecting against negative returns through a built-in floor.

When structured properly, an IUL can also serve as a powerful tax-advantaged financial tool, guided by key sections of the U.S. tax code:

  • IRC §7702 defines how life insurance policies are structured to receive favorable tax treatment

  • IRC §101(a) allows life insurance death benefits to be paid income-tax free to beneficiaries

  • IRC §72(e) permits access to policy cash values through loans and withdrawals, often on a tax-advantaged basis when designed correctly

This combination makes IULs a versatile option for individuals seeking tax-efficient growth, retirement income planning, and legacy protection—all while maintaining protection from market volatility.

See the Power of Indexing to the market!

An IUL allows you to grow money safely, access it on your terms, and create tax-advantaged income—without relying on banks or market timing.

Becoming Your Own Bank — Explained Simply

The “Become Your Own Bank” concept is powerful because it’s both simple and strategic when structured correctly.

It begins with purchasing a permanent life insurance policy—such as an Indexed Universal Life (IUL)—designed under government guidelines to allow maximum cash value accumulation while maintaining the minimum required death benefit.

You then intentionally overfund the policy, contributing more than the cost of insurance. The excess premium builds cash value inside the policy and is credited interest based on the performance of market indexes such as the S&P 500®, BlackRock®, Barclays®, Morgan Stanley®, and others.

Here’s where the strategy shines:

  • When the index goes up, your policy receives interest credits (typically on an annual basis)

  • When the market goes down, your cash value does not decline

  • Over time, gains are locked in, creating a stair-step effect rather than market volatility

As your cash value grows, it becomes a private reserve of capital.

You can access this money through policy loans—without bank approvals, credit checks, income verification, or usage restrictions. The funds are available for opportunities, emergencies, major purchases, or income planning. You control the repayment terms—or, in some cases, choose not to repay at all.

Later in life, this same cash value can be used to generate tax-advantaged retirement income, allowing you to supplement or replace traditional retirement distributions. At that point, the policy can function much like a personally funded pension, providing flexibility, control, and long-term financial confidence.

Do People Really Buy IULs? Are They a Scam?

Yes—Indexed Universal Life (IUL) policies are widely used and were among the top-selling life insurance products in 2025, driven by growing awareness through education, financial professionals, and social media. Today, there are 100+ insurance carriers offering IUL products, with some truly strong, well-designed options.

So why do IULs sometimes sound too good to be true?

Because they combine features most people aren’t used to seeing in one place:
life insurance, downside protection, tax-advantaged growth, and flexible access to cash value. When properly structured, those benefits are real—but they’re not for everyone.

An IUL is not an investment product. It is a life insurance contract, which means:

  • You must qualify medically

  • Applications require underwriting

  • Not everyone will be approved

That underwriting is actually a strength—not a weakness.

At IULProsperity.com, we work exclusively with A-rated insurance carriers offering fully underwritten IUL products. These carriers tend to provide stronger policy mechanics, more competitive caps and participation rates, and better long-term performance potential.

We generally do not recommend simplified-issue IULs. While they approve more people, those products often come with:

  • Lower cap rates

  • Lower participation rates

  • Higher internal costs passed on to the policyholder

In other words, easier approval usually means less favorable economics.

When designed correctly, with the right carrier and funding strategy, an IUL can be a legitimate, powerful financial tool—not a shortcut, not a loophole, and certainly not a scam. It’s simply a strategy that rewards proper structure, patience, and qualification.

As an independent marketing organization, we have access to a wide range of insurance carriers, allowing us to match clients with the solutions that best fit their goals. Not all IUL’s are created equal. F&G and NLG are the best forming IUL carriers as we enter 2026.

With Immediate Living Benefits, you’re covered for Terminal Illness, Critical Illness, Chronic Illness, Critical Injury, and Alzheimer’s—giving you peace of mind when you need it most.

Index Universal Life (IUL) is a versatile insurance product, with pricing based on your age, gender, and health. Acting sooner means locking in lower rates—today is more affordable than tomorrow, and tomorrow is less than next year. Take control now to secure a life plan that safeguards you, your loved ones, and your financial future.

A+ Rated: Service, Carriers & Customized Illustrations. Brian & Team Proudly Help Families Secure Financial Freedom Across the United States.

  • We Highly Recommend! Brian was friendly and explained an IUL to us when we inquired. He didn't pressure us and gave us the information we needed to make an informed decision. We looked at Brian's illustration that he designed and a couple others from other insurance reps. Brian's design smoked what the other reps offered, we are so happy that Brian helped secure a better future for us!

    Derek & Annie S.

    Ages 44 & 39

    Tampa, Florida

  • Brian is first class, he LISTENED to our needs and helped us create a solution for our needs. We were most interested in max-funding a policy in the first five years so we could become our own bank and lend to ourselves. Brian made it happen, I would HIGHLY RECOMMEND him to anyone looking for an IUL solution.

    Jim & Marie T.

    Ages 54 & 47

    Dallas, Texas

  • Brian is the BEST! We were looking for a 401k replacement. Brian showed us how an IUL could be a better option with the living /death benefits and market protection. Brian was patient with us as we were nervous he but gave us the confidence we needed to move forward. We plan to start an annuity with Brian in a few years.

    Anthony & Susan A.

    Ages 28 & 27

    Rochester Hills, Michigan

  • “We’re so glad we decided to get an Indexed Universal Life (IUL) policy. It gives us peace of mind knowing that we have both life insurance protection and the opportunity for growth. The best part is that the cash value is tied to the market, but we don’t have to worry about losing money in a downturn. It’s a win-win! We feel much more secure about our future, and it’s reassuring to know we have a safe way to build up income for retirement. It’s truly a smart decision for our family.”

    Tom & Mary

    Ages 51 & 45

    Michigan

  • Brian showed me the numbers and how to slowly sell-off some of my 401k to generate tax-free income when I plan to retire in 20 years. I talked to another insurance guy at my bank and he could only offer a generic plan. Brian customized a plan WITH ME and I'm very pleased with the outcome. Don't guess, just do it. Brian has your back!

    Amanda S.

    Age 50

    Milwaukee, Wisconsin