Universal Life Insurance
What is the participation rate in an indexed universal life policy?
The participation rate in an indexed universal life (IUL) policy is the percentage of the index gain that is credited to the cash value. For example, if the participation rate is 80% and the S&P 500 gains 10%, the cash value is credited with 8%. Participation rates are set by the insurance company and can change each year.
Key Points
- Participation rate: percentage of index gain credited to cash value
- Set by insurance company and can change each year
- Example: 80% participation rate, S&P 500 gains 10% = 8% credited
- Higher participation rate = more growth potential
- An independent agent can compare IUL policies with different participation rates