WHAT IS INDEXED UNIVERSAL LIFE INSURANCE (IUL)

Indexed Universal Life is permanent life insurance that provides a death benefit and builds cash value over time. The cash value grows based on the performance of a market index, such as the S&P 500, while protecting you from market losses.

The goal is simple, protect your family while building tax-advantaged income.

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WHY IUL EXISTS

Many people want growth like the market but do not want to risk losing money. Others want tax-advantaged income in retirement.

IUL addresses both:

Protection for your family
Growth potential without market loss
Income you can use later

HOW IT WORKS

You pay premiums into the policy
*Part goes to the cost of insurance
*Part goes into cash value

The cash value is linked to a market index:

If the index goes up, your account earns interest
If the index goes down, you do not lose money (0 percent floor)

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KEY CONCEPTS YOU MUST UNDERSTAND

Floor

This is the minimum return, usually 0 percent
You do not lose money due to market drops

Cap

This is the maximum return you can earn

Example: cap of 8 percent

Participation Rate
The percentage of the market gain you receive
Example: 80 percent participation

GROWTH EXAMPLE

Let’s say:

Cap = 8 percent
Floor = 0 percent

Year 1
Market up 12 percent → You get 8 percent

Year 2
Market down 10 percent → You get 0 percent

Year 3
Market up 6 percent → You get 6 percent

This creates steady growth without losses.

CASH VALUE ACCUMULATION

Over time, your policy builds cash value that grows tax-deferred.

Simple illustration:

Monthly premium: $500

Year 1 to 5
Cash value grows slowly due to costs

Year 10
Cash value begins compounding

Year 20+
Significant accumulation builds

This can be used later for income.

HOW YOU ACCESS THE MONEY

You can access cash value through:

Policy loans
Withdrawals

Loans are often tax-free if structured properly

This is how many people create retirement income.

INCOME STRATEGY EXAMPLE

A person funds an IUL for 20 years

At retirement:

They take annual loans from the policy

Example
$300,000 cash value

Withdraw $20,000 per year

This income is typically tax-advantaged

WHO IUL IS FOR

People ages 25 to 60
People wanting tax-advantaged growth
People planning for retirement income
Business owners or high earners

KEY BENEFITS

Lifetime protection
No market loss
Tax-deferred growth
Tax-advantaged income
Flexible premiums
Flexible death benefit

FLEXIBILITY

Unlike whole life, IUL allows you to:

Adjust premium payments
Increase or decrease coverage
Change how aggressively funds are allocated

This makes it adaptable as your life changes.

COMMON MISUNDERSTANDINGS

“It is the stock market”
It is not directly invested in the market.

“It is risky”
You have downside protection.

“It grows like stocks”
Growth is limited by caps.

“It is only life insurance”
It is also a financial tool for income.

COMPARISON TO OTHER OPTIONS

Term
Cheaper, no savings

Whole Life
Stable, but slower growth

IUL
Balanced growth and protection

BOTTOM LINE

Indexed Universal Life insurance is a strategy that combines protection, growth, and income. It allows you to build wealth safely while creating future income you can use during retirement.

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Ashford Group FFL LLC

WHAT IS INDEXED UNIVERSAL LIFE INSURANCE (IUL)

WHY IUL EXISTS

HOW IT WORKS

KEY CONCEPTS YOU MUST UNDERSTAND

GROWTH EXAMPLE

CASH VALUE ACCUMULATION

HOW YOU ACCESS THE MONEY

You can access cash value through:

INCOME STRATEGY EXAMPLE

WHO IUL IS FOR

KEY BENEFITS

FLEXIBILITY

COMMON MISUNDERSTANDINGS

COMPARISON TO OTHER OPTIONS

BOTTOM LINE

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