The Hidden Power of IULs – Using Bonuses and Multipliers to Boost Returns

Indexed universal life insurance policies are increasingly popular, offering a unique blend of life insurance coverage and investment potential. As IUL’s popularity grows, the marketplace has become crowded with numerous new products touting exciting and enticing features to differentiate themselves from the rest.

Defining IUL terms for clarity

In recent years, an increasing number of insurance carriers have entered the IUL market, driving innovations in product design. To compete with other carriers, many have introduced bonuses and eventually multiplier features to their products. Understanding the different kinds of bonuses and multipliers offered in today’s market is essential.

Interest bonuses

Simple interest bonuses are perhaps the most basic form of bonus found in IUL products, although you may also hear them referred to as “persistency credits” or “account value enhancements.” These bonuses apply additional interest credit to the policy value based on a specific period.

While it provides a steady, albeit modest, boost to the policy’s growth, it’s not dependent on the annual index credit, unlike many existing multipliers. It’s a conservative addition to the policy’s value, typically ranging from 0.5% to 1.5% over a specified period.

More advanced bonuses, known as multipliers, have become common in the IUL market.