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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.

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 a Segment and the 12-month Segment Term for that segment begins.

  • Values remain in the segment for the length of the segment term. Withdrawals may occur.

  • At the end of the segment term, each segment earns an Indexed Credit. The Indexed Credit is calculated from the 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 segment if value remains in the segment at segment maturity. The amount calculated is subject to the declared limits for the specific segment.

  • These limits are determined at the beginning of the segment term and are guaranteed for the entire segment term.

  • There are four choices of Indexed Accounts (Indexed Account A, B, C, and E) and each has a different type of limit. Indexed Account A sets a cap on the Indexed Credit for a segment. Indexed Account B declares the proportion of the change in the index that will determine the Indexed Credit. Indexed Account C has a higher minimum cap than A and an Indexed Account Charge. The guaranteed maximum Indexed Account Charge is 1%. Lastly, Indexed Account E determines the Indexed Credit using a cap with a guaranteed multiplier of 50%. Indexed Account E has an Indexed Account Charge with a guaranteed maximum of 4%.

    Growth cap - Indexed Account A
    The growth cap is the top amount Kansas City Life credits to segments in Indexed Account A. The growth cap will vary and be reset at the beginning of a segment term.

    Participation rate – Indexed Account B
    The participation rate determines how much of an increase in the S&P 500’s* Index Value applies to segments in Indexed Account B.

    Growth cap – Indexed Account C
    Higher minimum growth cap than Indexed Account A and an Indexed Account Charge.

    Growth cap with Indexed Account Multiplier – Indexed Account E
    Indexed Account Multiplier is applied to the increase in the Index Value limited by the cap. There is an Indexed Account Charge associated with the Indexed Account Multiplier.

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

  • Money is transferred at least once per quarter into an Indexed Account. The day on which that occurs is called a sweep date, and this creates a Segment. A Segment matures in 12 months. At Segment Maturity an Indexed Credit is calculated from the change in the S&P 500*.

  • The value in the Segment earns an Indexed Credit which is calculated from 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 percentage change in the Index Value to arrive at the Index Growth Rate which is applied to the average balance in the Segment during the Segment Term provided there is money in the Segment at maturity.

  • Segments automatically renew for another Segment Term unless a transfer is requested. Premiums received since the last sweep date and any requested transfers are rolled into the same Segment so that for any month, there will be a single new Segment created for a 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&P 500” 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&P 500” 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 Company’s Compass Elite and EquiFlex Indexed Universal Life are 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 products.

**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.