Equity Indexed Universal Life Insurance
What Does Equity Indexed Universal Life Insurance Mean?
Equity Indexed Universal Life Insurance (EIUL) is a policy that offers both a death benefit and an investment component. Premiums for this policy are partially allocated to stock investments, from which the policyholder can eventually take a loan. However, taking such loans may reduce the death benefit.
Insuranceopedia Explains Equity Indexed Universal Life Insurance
Equity Indexed Universal Life Insurance (EIUL) is a type of life insurance distinguished by its death benefit, which is supplemented by stock investments.
This investment is relatively safe due to a 0% floor, meaning the policy’s cash value is not impacted if the market value of the stocks declines. However, it does have a capped ceiling; regardless of how much the stock values increase, there is a limit to the profits that can be added to the policy’s cash value.
The policyholder can withdraw from the policy’s cash value, but these withdrawals function as loans and accrue interest. Failure to repay them can reduce the death benefit.
