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Life insurance
Life insurance
Indexed universal life insurance
What is indexed universal life insurance?
Indexed universal life insurance is more affordable than whole life insurance and can offer cash value growth, along with features that can give you flexibility as your needs change over the years.
What does indexed universal life insurance offer?
In addition to lifetime protection, indexed universal life insurance offers a unique combination of benefits to help meet your needs, including:
Plan flexibility
You can change the protection level, how frequently you pay your premium or even the premium amount, as long as you remain within set boundaries.
Access to the cash value
If your needs change, you have the potential to build and borrow from the cash value while you’re alive.1 Learn more in this short video on IUL accumulation.
Long-term care coverage
You have options for covering potential long-term care expenses — for help with things such as bathing, dressing, eating, food preparation and household cleaning.
Tax advantages
All life insurance products offer tax advantages, including a tax-free death benefit and tax-deferred cash value growth.
How does indexed universal life insurance work?
A portion of your premium payment goes toward the insurance, which includes any fees and death benefit coverage.
The remainder of your premium payment adds to the policy’s cash value, which you can withdraw or borrow against.
With this policy, you can choose between a variety of indexed and fixed interest strategies to help enhance your cash value growth potential. You also have the ability to withdraw or borrow against that cash value. If you pass away, the income tax-free death benefit will be paid to your beneficiaries.
Could indexed universal life insurance be right for you?
Check out how it compares to other types of life insurance to get an idea of whether it meets your needs.
| Whole Life | Indexed Universal Life | Universal Life | Variable Universal Life | |
|---|---|---|---|---|
| Death benefit | Yes | Yes | Yes | Yes |
| Designed for low cost | No | No | No | No |
| Access to your money1 | Yes | Yes | Yes | Yes |
| Market participation | No | No | No | Yes |
| Tax advantages | Yes | Yes | Yes | Yes |
| Flexible payments2 | No | Yes | Yes | Yes |
Who may benefit from indexed universal life insurance?
Indexed universal life insurance is designed for people who are looking for:
- Protection for your family in case of your premature death
- Potential cash-value growth with tax advantages to use for things such as supplemental retirement income
- Built-in flexibility, in case something happens and you need to adjust your premium or death benefit value
- Options for covering long-term care expenses
- A way to transfer wealth to future generations in a tax-efficient manner
Frequently asked questions
A life insurance death benefit is the tax-free payout to the beneficiary or beneficiaries, offering financial support when the insured person passes away.
Whole life insurance offers 3 important tax advantages that can be useful additions to a comprehensive financial strategy:
- A tax-free death benefit: The death benefit paid to beneficiaries is typically not subject to income tax.
- Tax-deferred cash value growth: Any cash value within a permanent life insurance policy can grow on a tax-deferred basis until a withdrawal is made.
- Tax-free policy loans: Policyholders can borrow against the cash value of their life insurance policy without facing immediate tax implications.
With indexed life insurance, your money is never actually invested in the market. You’re protected with a guaranteed minimum interest rate in the fixed account and a guaranteed minimum floor rate in the indexed interest strategies.
Yes, it is possible to outlive an indexed universal life insurance policy. If the policyholder lives beyond the policy maturity age, which varies by insurer, they will receive the entire cash value of their account and the policy will end. There are also some products that offer extended death benefit protection for an additional cost.
Term life insurance covers you for a set length of time, or term, typically 10 to 30 years. If you pass away during that period, the insurance company pays a death benefit in the amount you choose.
Indexed universal life insurance is intended to last a person’s lifetime. The premium is generally higher than term life insurance because it not only funds the tax-free death benefit, but a cash value account. In addition to the death benefit, the policy’s cash value grows over time and can be used for a number of purposes, including low-interest loans, while the policyholder is alive.
Our products
Accumulation-focused products
Nationwide® Indexed UL Accumulator III
Offers more tax-advantaged growth potential with a diverse lineup of index options, along with the ability to lock in your investment gains
In New York only
Protection-focused products
Provides a cost-efficient death benefit to help assure a good value for your money, along with the potential of cash value growth so you can plan for the future with confidence
In New York only
Survivorship-focused product
Permanent life insurance on two people that helps protect your family by paying a death benefit when the second insured passes away
Tools and resources
Hours of operation are 9 a.m. to 8:30 p.m. ET, Monday through Friday.
[1] This assumes that the contract qualifies as life insurance under section 7702 of the Internal Revenue Code (IRC) and is not a modified endowment contract (MEC) under section 7702A. Most distributions are taxed on a first-in/first-out basis as long as the contract meets non-MEC definitions under section 7702A. Loans and partial withdrawals from a MEC generally are taxable and, if taken prior to age 59½, may be subject to a 10% tax penalty.
[2] This assumes there is sufficient cash value to cover monthly policy charges. Keep in mind that variable universal life insurance has market volatility so it’s possible that you may need to pay an additional premium on your policy.
Guarantees and protections are subject to Nationwide’s claims-paying ability.