What index options are available in IUL policies?

Most IUL policies offer multiple index strategies that policyholders can allocate among based on their preferences. The S&P 500 annual point-to-point strategy is the most common: interest is credited based on the percentage change in the S&P 500 index from the start to the end of a one-year crediting period, subject to the cap and floor.

Other common options include the S&P 500 monthly average (credits interest based on the average of monthly index values—smoothing out volatility), blended multi-index strategies combining two or more indices, and uncapped strategies with a participation rate below 100% instead of a cap.

Some carriers offer proprietary or alternative indices, including volatility-controlled indices designed to provide more consistent crediting by reducing exposure during high-volatility periods. These indices can have higher caps but are often less transparent and harder to evaluate historically.

Diversifying across multiple index strategies within an IUL can reduce concentration risk. Your agent should provide historical crediting rate data and stress-test illustrations for each available option. Cap rates and participation rates on each strategy can change annually—review your allocations periodically with an agent in our network.