Equity Indexed Universal Life Insurance (EIUL)

Definition - What does Equity Indexed Universal Life Insurance (EIUL) mean?

Equity Indexed Universal Life Insurance (EIUL) is a policy that provides a death benefit and an investment plan. Premiums for this policy are partly allotted to investments in stocks, from which the policyholder can eventually take a loan. Such loans, however, may cause a decrease in the death benefit.

Insuranceopedia explains Equity Indexed Universal Life Insurance (EIUL)

EIUL is a kind of life insurance distinguished by the fact that its death benefit is supplemented by stock investments.

The investment is quite safe because of the 0% floor, which means that the cash value of the policy is not affected if the stocks that the policy is invested in suffer a decline in the market. However, there is a limited ceiling: no matter how much the stocks rise in value, there is a limit to the profits that the policyholder can add to the cash value.

The policyholder can withdraw from the cash value of the policy, but they have to pay them with interest like a loan. And failure to pay can decrease the amount of the death benefit.

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