Equity Indexed Life Insurance
Crediting 140% of the S&P 500
The Wealth Preservation Institute
378 River Run Dr.
St. Joseph, MI 49085
Equity Indexed UL
• As many owners of VUL policies have found out, cash
values in a variable policy not only go up with the market
but they fall with the market as well (see 2000-2003
• This prompted creation of a “new” universal life policy, the
equity indexed life policy (EIUL).
• An EIUL policy is a UL policy that has an annual
minimum return guarantee every year but still allows
the cash value in the policy to grow at market rates every
year if the stock market performs well.
• For example, from 1994-2004, the S&P 500 still averaged
12.1% (even though the stock market had a “crash from
Nothing is for free
• Because of the contractual guarantees, EIUL
policies take away some of the upside potential
of the policies with caps on the growth.
• If your clients want to stretch for return in excess
of 14% a year, then they would not want an
• For clients who want protection from down turns
in the market and growth pegged to the best
stock index, then the EIUL is the way to go.
• The portion of the premiums paid into the product
which are not allocated to insurance costs (M&E
costs) are used to purchase options in a stock
index (typically the S&P 500 index). (Which out
performs over 80% of the mutual funds).
EIA Sales are exploding!
• Up 67% last year – 23.4 Billion $$
• Why? Consumers are looking for “safe money
places” with the potential to receive higher interest
than with traditional fixed annuities but without
subjecting retirement savings to market risk.
National Underwriter, April 2005, article Index Annuities Sales in 2004.
• Flexible premiums, adjustable benefits
• Interest Crediting Strategies
– Potential to accumulate Cash Value faster than
Fixed UL over the long-term
• Appeals to a growing segment of the market
• Whole Lif