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IUL Index Allocation Options and How to Get Started

IUL index allocation options
Insurance Quotes 2 Day Team

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA.  Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

Holly Mitchell  &

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Rob Pinner   &

Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

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Indexed universal life insurance (IUL) is a permanent life insurance policy that offers a death benefit. Like other types of permanent insurance, your periodic premiums will earn tax-deferred interest which increases the cash value in your policy.

Not only does it offer a traditional declared interest rate for the time the policy is active, but IUL also offers the ability to earn interest that is linked to the movement of a selected index or indexes.

These policies are funded with a cash value account. The interest rate is then compounded. Unlike traditional universal life, where interest is based on a fixed rate, an IUL earns interest on an indexed-rate basis. There are three critical options within this policy:

  1. A policyholder can choose from various equity index accounts and link their cash account to the index(s).
  2. A policyholder can choose to invest in one of two options: a fixed account or an equity index account.
  3. The policyholder will always have access to invest in multiple indexes like NASDAQ, S&P 500, Credit Suisse, and others.

The amount of cash you have to invest has a limit. The limit is the periodic premium minus the cost of the insurance and administrative fees. However, this limit is flexible so that if you choose to pay a higher premium over the years, you can increase your investment cash as the cost of insurance increases.

Index Allocation Options in an Indexed Universal Life Policy

Although there are many index allocations to choose from, your availability will vary among the insurance companies that offer IUL. The company you choose should be highly-rated, offer outstanding customer service, and has demonstrated over time that the indexes they offer provide historically outstanding returns.

Listed below is a limited illustration of the indexes offered by highly-rated life insurers:

Insurance Company Equity Index Account Examples
Lincoln Financial Fidelity AIM -Dividend Indexed – Fixed Bonus
Fidelity AIM Dividend Indexed
S&P 500 Fixed Bonus Indexed Account
S&P 500 Traditional Indexed Account
S&P 500 Performance Trigger Indexed Account
Prudential S&P 500 Indexed Account
Goldman Sachs Voyager
National Life Group Credit Suisse Balanced Trend 5%
Hang Seng Index Cap Focus Strategy
S&P 500 Annual Point-to-Point Cap Focus
S&P 500 Annual Point-to-Point 1% Floor
North American Fidelity Multifactor Yield Index 5% ER
S&P 500 Annual Point-to-Point
S&P 500 Monthly Point-to-Point
S&P 500 Annual Point-to-Point with Spread
High Par S&P 500 Annual Point-to-Point
S&P Mid-Cap 400
Russell 2000
Uncapped S&P 500

Although this represents a small selection of highly rated insurance companies that offer Indexed Universal Life Insurance with a selection of multiple indexes, it demonstrates your need to speak with an independent insurance advisor so you can review the historical return data needed to make an informed decision.

To begin the process of getting an IUL for yourself, complete the form on the side of this page.

Frequently Asked Questions

Question:  What is the most common index allocation used in an IUL policy?

Answer:  Up until recently, the S&P index.  Now that carriers are creating their own proprietary indexes we are seeing a wide array of indexes selected.


Question:  What are some unique IUL allocations options to look for:

Answer:  Allianz has the PIMCO and Bloomberg.  North American has the Fidelity MFY 5% index.  Lincoln has the Fidelity AIM Dividend Indexed Account.


Question:  Can allocation changes be made once the IUL Policy is in force?

Answer:  Yes.  Allocations may be changed each year on the policy anniversary.

author avatar
Doug Mitchell, CLU Independant Advisor
Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent almost 30 years in the life insurance industry and has also held licenses to sell securities, long-term care insurance and home and auto insurance. Doug is a Top of the Table Million Dollar Round Table member (MDRT).  MDRT is a global, independent association of the world's leading life insurance advisors.  For two years, Doug served as President of the Auburn Opelika Association of Financial Advisors and has been a member of the Million Dollar Round Table. He obtained Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award. Later in his career with New York Life he was an Executive Council Member. Doug currently serves as President of Ogletree Financial, a managing general agency serving life insurance agents and clients in all parts of the United States. Today, Doug’s main focus is servicing 1000s of policyholders and growing the agency through the reach of