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Indexed Universal Life Insurance

If you’re looking for a product that offers death benefit protection and the opportunity to build long-term cash value accumulation, an Indexed Universal Life (IUL) may fit your needs. An IUL policy will provide security today with the cash value growth potential you need for tomorrow.

Key benefits

Why is this important?

Premium flexibility

The ability to increase or decrease premiums in the future to accommodate your budget or cash flow needs.

Death benefit flexibility

The option to adjust the policy’s death benefit should your life insurance protection needs change in the future.

Builds cash value

Accumulates valuable long-term cash values for future cash needs such as helping fund a child’s college education, paying off your mortgage early, funding a business opportunity or supplementing retirement income.

Tax advantages

Life insurance death proceeds are paid out income-tax free and the IUL policy’s cash values accumulate tax-deferred, an important feature when you consider how taxation can have an adverse effect on your savings growth potential.

Favorable loan feature

The ability to access the IUL policy’s cash value tax-free through policy loans allows you to maximize your cash needs without sacrificing valuable life insurance protection. (Loan balances will reduce the death benefit.)


The option to design an IUL policy that reflects your particular needs and situation.

How does Indexed Universal Life insurance work?

When you pay your IUL premium, you have the flexibility to choose between a minimum and maximum amount. The premium goes in to the Fixed Account where premium expenses are deducted. The remainder has the potential to build policy cash value that can be accessed through policy loans and withdrawals**. This account value is allocated between the Fixed Account and Indexed Accounts based on your instructions.

The basics of indexing

  • With an indexed universal life policy, you allocate premium to an Indexed Account, thereby creating an Index Segment and the 12-month Index Period for that segment begins.

  • Values remain in the segment for the length of the segment term. Cost deductions or withdrawals may occur.

  • At the end of the segment term, each segment earns an Indexed Credit. The Indexed Credit is based on the index change of the S&P 500* during that one- year period and is subject to the limits declared for that segment.

  • An Indexed Credit is calculated for a policy segment if value remains in the segment at segment maturity. The amount is calculated subject to the declared limits for the specific segment.

  • These limits are determined at the beginning of the Segment Period and are guaranteed for the entire Segment Period.

  • There are two choices of Index Accounts and each have a different type of limit. One sets a cap on the Indexed Credit for a segment and is referred to as Annual Point-to-Point with Cap. The other declares the proportion of the change in the index that will determine the Indexed Credit. This is referred to as the Annual Point-to-Point with Participation Rate.

    Growth Cap:
    The growth cap is the maximum that can be credited to an IUL. The growth cap will vary and be reset at the beginning of a segment term.

    Participation Rate:
    The participation rate determines how much of an increase in the S&P 500’s* Index Value applies to the IUL policy.

  • Regardless of which crediting method you choose, your cash value is always protected from negative market performance.

  • Money is transferred at least once per quarter. The day that occurs is called a sweep date, and this creates a segment. A segment matures in 12 months. Indexed Credit at maturity is based on change in the S&P 500*.

  • With this crediting method the value in the Indexed Account earns an Indexed Credit which is based off of an Index Growth Rate. That growth rate is a percentage change in the current index from the start of a segment until the segment maturity date.

  • The Indexed Account constraints are applied to the change in the Index Value to arrive at the Index Growth Rate which is applied to the average balance of the segment provided there is money in the segment at maturity to calculate the Indexed Credit.

  • Segments automatically renew for another Index Period unless a transfer is requested. All premiums received since the last sweep date along with any transfer requests may be rolled into the same Index Segment. This means that for any given month, there will be a single segment created for any given Indexed Account.

Kansas City Life Insurance Company also has many policy riders available that would allow you to design a life insurance policy that fits your particular needs and budget. For more information, please contact a licensed Kansas City Life Insurance Company agent near you.

*The “S&P500” is a product of S&P Dow Jones Indices LLC, and has been licensed for use by Kansas City Life Insurance Company.

*Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by Kansas City Life Insurance Company. The “S&P500” is a product of S&P Dow Jones Indices LLC, and has been licensed for use by Kansas City Life Insurance Company. Kansas City Life Insurance’s EquiFlex Indexed Universal Life is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates make any representation regarding the advisability of investing in such product.

**Policy loans and withdrawals will reduce the available cash value and death benefit and may cause the policy to lapse or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force.