Indexed universal life insurance is a lot like universal life insurance, however, it does have a couple of wrinkles not found in traditional universal insurance policies. Universal life insurance comes in many different forms, from your basic fixed-rate policy to variable models that allow the policyholder to select various equity accounts in which they can invest. An indexed universal life insurance policy gives the policyholder the opportunity to allocate cash value amounts to either a fixed account or an equity index account. Indexed policies offer a variety of popular indexes to choose from, such as the S&P 500 and the Nasdaq 100.
Indexed policies allow policyholders to decide the percentage of their funds that they wish to allocate to fixed and indexed portions. Also, these types of universal insurance policies typically guarantee the principal amount in the indexed portion but cap the maximum return that a policyholder can receive in said account. Since these policies are seen as a “hybrid” universal life insurance policy, they are usually not very expensive and are safer than an average variable universal life insurance policy.
GUL stands for Guaranteed Universal Life. One of the main characteristics of this type of policy is that the death benefit is guaranteed, regardless of age, for as long as you continue to make the premium payments on time.
Despite the implication of its name, guaranteed universal life insurance (GUL) is not whole life insurance. But, it is designed to last your entire life. It does not build cash value, allowing you to keep your monthly payments low, and does not carry the expensive management fees of whole life.