How Does Equity Indexed Universal Life Insurance Work?

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   Steve Savant

   Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona

   Indexed universal life uses domestic and foreign indices with crediting methods:cap rates, participation rates and spread rates. The life insurance company generally purchases index options. If the options are exercised a positive credit is applied. If the options are not exercised, then nothing is credited. Like all life insurance policies, index universal life has policy fess, expenses and cost of insurance that is deducted from the premium. Then the credit, if any, is applied.

   Answered on July 26, 2013

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