How to Sell Indexed Universal Life Insurance (IUL) 

Ever had a client say, “I want life insurance, but I also want my money to grow”? That’s your cue to explore indexed universal life insurance. 

At Midwestern Marketing, we work with insurance agents across the country to simplify a variety of products and support stronger, smarter sales. Indexed universal life insurance coverage doesn’t have to be hard to sell—if you know how it works, how to explain it clearly, and match it with the right clients for the right situation. Let’s walk through exactly how to do that. 

What Is Indexed Universal Life Insurance? 

Indexed universal life insurance is a type of permanent life insurance. It offers a death benefit amount and the chance for the policy’s cash value component to grow over time. 

How does it grow? The growth potential the policy earns is via credited interest tied to the performance of an external index—like the S&P 500—but it’s not directly invested in the market, subject to caps, rates and spreads. This means policyholders has the opportunity to benefit from the index’s upside, without taking on its full risk. 

Other IUL features include: 

• Flexible premiums (clients can adjust payments based on their needs) 

• Adjustable death benefit (can increase or decrease within limits) 

• Cash value access through policy loans* or withdrawals 

Think of IUL as a flexible financial tool: part protection, part strategy. 

Benefits of IUL for the Right Clients 

Indexed universal life insurance policy isn’t for everyone—but for the right client and situation, it can be a game-changer. Here’s what makes it attractive: 

• Lifelong protection: Permanent coverage as long as premium payments are made. 

• Tax-deferred cash value growth: Clients won’t pay income taxes on gains inside the policy. Be sure to remind them that you’re not a tax advisor and encourage them to consult a qualified tax professional for guidance on their specific situation. 

• Tax-free access: Properly structured loans can provide retirement income without income tax hits.  There are few considerations with this strategy so be sure to thoroughly evaluate your client’s financial situation, goals and the product. 

• Flexible premiums and death benefits: Adjust over time to match life stages. 

Best-fit clients? 

• Clients who have access to cash and can fund the product properly to take advantage of its features: 

• High-income earners with a higher risk tolerance seeking tax-advantaged growth 

• Business owners who need estate planning and retirement planning tools 

• Families who want to protect wealth and leave a legacy for beneficiaries 

How to Explain IUL Without Confusing Your Client 

Clients don’t want a lecture—they want clarity. Here’s how to break down indexed universal life insurance products in a way that makes sense: 

Script Example: 

“This policy protects your loved ones if something happens to you. But it also gives your money a chance to grow, through credited interest, based on an external market index- subject to limits. You’re not investing in the stock market, but you have the opportunity to benefit when selected indices do  well. And even in a bad year, there’s a floor that protects your cash value from dropping.” 

Analogy: 

“Imagine your money is riding an escalator. When the market goes up, your cash value can go up. But if the market drops, your escalator stops—but it doesn’t go down.” 

Avoid saying “stock market” or “guaranteed growth.” Focus on “market-linked credited interest” and use compliance-approved carrier materials to help tell the story. 

Common Misunderstandings About IUL 

Let’s clear up a few things agents and clients may get wrong: 

• IUL insurance policies aren’t guaranteed to grow fast. It grows when the market does—and within caps and floors. 

• It’s not “too good to be true.” Be upfront about costs, fees, surrender charges and periods, underwriting, and participation rates. 

• Watch your words. Avoid phrases like “risk-free” or “investment.” These phrases do not accurately or fully describe the product. 

Stick to language approved by carriers and always document your conversations. 

Tips for Discussing IUL Policies With Confidence 

You don’t have to be a product expert—you just need to match the policy to the person. Here’s how: 

When you have a good understanding of the client’s financial situation, ask great discovery questions: 

• “Do you want both protection and the ability to grow cash value over time?” 

• “Are you comfortable with a type of life insurance that changes as your needs change?” 

• “Would it help to have tax-free income options in retirement?” 

Frame IUL as a long-term tool. Position it as a slow and steady part of a bigger strategy—not a quick fix. Explain all product features, restrictions such as, surrender periods/charges, caps, floors, and index credits early to avoid surprises later. 

Cross-Selling IUL With Other Financial Products 

Indexed universal life insurance may fit well alongside: 

• Term life insurance policies: Add IUL to give long-term value once term ends 

• Annuities: For clients who want both income and legacy planning 

• Retirement strategies: Use IUL for supplemental income without adding to taxable assets when death benefit is still important to your client 

Ask clients: “What’s your backup plan if taxes go up in retirement?” That’s your door to explore if tax-free policy loans from an IUL may be an appropriate choice. 

Indexed universal life insurance is a powerful tool—but only when it’s understood. Keep it straightforward. Focus on value. Match it to the right person and right scenario. 

At Midwestern Marketing, we make it easier for you to sell indexed universal life insurance the right way—with carrier-specific guidance, sales tools, and illustrations that close the deal. 

Want to sell more IUL the right way? Contact MWM today and let’s talk strategy. 

* Policy loans and withdrawals will reduce the available cash value and death benefit and may cause unintended consequences, including lapse or taxable events. Please see full loan and withdrawal disclosure within the product brochure for detail. 

Midwestern Marketing is a true FMO where a handshake still means something. We value our agents and take service and contracting to a new level. The teamwork and principles by which we operate are reflected in the thousands of agents we serve nationwide. Feel free to call 877-278-3775 or email us at info@midwesternmarketing.com. We are certain we can help you grow your business!