It is designed to not only provide a guaranteed death benefit,
referred to as the face value, but to also provide a
return on the policy known as a
cash or accrued value.
What differentiates an Indexed UL policy from other types of permanent life insurance used for
cash accumulation is that the growth of the policy's
cash value is based
on the performance of an equity index (usually the S&P 500), excluding dividends, collared by a cap and a floor — rather than based
on a flat crediting rate that is established by the insurance carrier and adjusted from time to time (a product
referred to as «current assumption universal life»), based
on a flat dividend rate that is established by the insurance carrier and adjusted from time to time (a product
referred to as «whole life»), or based
on the actual investment
returns of specific equity investments (a product
referred to as «variable universal life»).