Universal Life Insurance
What is the floor in an indexed universal life policy?
The floor in an indexed universal life (IUL) policy is the minimum interest rate credited to the cash value. Most IUL policies have a 0% floor — meaning the cash value cannot decrease due to market declines. Some policies have a positive floor (e.g., 1% or 2%), guaranteeing a minimum positive return.
Key Points
- Floor: minimum interest rate credited to cash value
- Most IUL policies: 0% floor — cash value cannot decrease due to market declines
- Some policies: positive floor (1-2%) guaranteeing minimum positive return
- 0% floor: principal protection
- An independent agent can help you compare IUL policies with different floor rates