IUL Fundamentals
What does IUL stand for?
Indexed Universal Life.
What does FIA stand for?
Fixed Indexed Annuity
What is an illustration designed to show?
A projected view of policy performance over time.
What term describes an underwriting decision where the carrier chooses not to offer any coverage?
A decline
What is the floor on most IUL and FIA strategies?
0%
What is the primary benefit of an IUL policy for long-term planning?
Protection + Tax-advantaged cash value growth.
What guarantee makes FIAs attractive for retirees?
Principal protection or guaranteed income
What should you highlight when presenting an IUL illustration?
Solve for the client’s goals: coverage, cash value, retirement income
What do we call the additional documents or exams an underwriter requests before making a final decision?
Requirements or outstanding requirements.
If the index returns 8% and the cap is 6%, what is the credited amount?
6%
What determines how the IUL’s crediting rate is calculated?
Performance of the chosen index (not investing directly in the market)
What does an FIA credit interest based on?
An external index’s performance (subject to caps, spreads, or participation rates).
What index crediting assumptions must be included as regulated?
Guaranteed and non-guaranteed values.
What is the purpose of the HIPAA authorization?
Allows the insurance company to obtain medical information.
What is the participation rate?
The percentage of the index gain that is credited to the policy.
or
The portion of the index’s growth that the insurance company credits to your policy.
What is the premium amount that helps maintain policy performance but is not required?
The target premium
What is the typical surrender period for an FIA?
7–10 years
Under which IRS rule can an IUL grow cash value tax-deferred and allow tax-free access through loans as long as the policy stays in force and doesn’t become a MEC?
IRS Section 7702.
What is the purpose of the suitability questionnaire?
Ensures the product fits the client’s financial situation and goals
If the participation rate is 50% and the index returns 10%, how much is credited?
5%
What feature protects the client from market losses when the index is negative?
The floor (typically 0%).
What rider can provide a paycheck for life regardless of market performance?
Guaranteed Lifetime Withdrawal Benefit (GLWB) rider or Income Rider
Why should agents avoid showing overly aggressive illustrated rates?
Compliance requires realistic, historically supported assumptions
What underwriting term describes the category assigned to an applicant based on health and lifestyle, such as Preferred, Standard, or Substandard?
Risk class
What is a “surrender charge” in a life insurance policy?
A fee is charged when a policyholder withdraws or cancels the policy during the early years.