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How to Open an Indexed Universal Life Account (IUL) - A Comprehensive Guide

Updated: 6 days ago

Open an IUL Account
How to Open an Indexed Universal Life Account (IUL)

A Detailed Guide on Setting Up an Indexed Universal Life (IUL) Account

If you want to know How to Open an Indexed Universal Life Account (IUL), you're in the right place. We'll guide you through the account opening process and highlight the numerous advantages of an IUL policy.

View IUL accounts as long-term investments, not as "quick money-making schemes." I frequently advise my clients to consider an IUL as the "defense" in their retirement strategy.

This guide includes:

  • The process of setting up an IUL account

  • Understanding the functioning of IULs and your credit allocation options

  • Choosing the most suitable IUL features for your needs

  • Comprehending the medical prerequisites for IUL

  • Financing your IUL via single payment versus multiple payments

  • Track your IUL once you activate it by following these methods

Let's get started.

What is an IUL (Indexed Universal Life Insurance) Account?

An IUL account provides enduring insurance coverage combined with a cash value / savings component that is tied to the interest-crediting allocations of a stock market index. It's akin to maintaining a savings account with a bank, but in this case, it's with an insurance firm that offers a significantly higher potential for gains along with protection against market downturns.

Understanding How does an IUL Work

Indexed Universal Life Insurance (IUL) is a form of enduring life insurance that incorporates a savings element linked to the performance and returns of stock or market indices. When policyholders pay their premium, a portion of it goes towards the life insurance aspect, while the bulk of the premium typically contributes to the cash value, reflecting the growth of a market index, or occasionally allocating a part to a fixed account.  

  • A fixed account accumulates cash value through a predetermined interest rate, set annually by the insurer. This interest is assured for the subsequent 12 months. By nature, the returns from a fixed account are more consistent than those associated with equity-indexed accounts. The fixed interest rate in an IUL may vary every 12 months or it may remain unchanged.

  • An equity-indexed account grows by reflecting the performance of a stock market index such as the S&P 500. The growth of this account type is contingent on the index's performance, providing IUL holders an opportunity to benefit from market increases while safeguarding them from market downturns.

IULs enable you to distribute funds into an equity index account based on your requirements and financial objectives. You can build cash value in just one account or balance contributions in multiple accounts for various potential rewards scenarios.

How to Open an IUL Account

Initiating an indexed universal life insurance (IUL) account can be done by submitting an application for a policy via Various insurance firms will have distinct prerequisites and processes for IUL applications, but the following are the typical steps you'll need to take:

Determine Your Requirements

Prior to contemplating an IUL policy, meticulously evaluate your life insurance requirements and comprehensive financial objectives. Here's the reason:

  • IUL Suitability: IULs are good for wealth creation without risk of market losses. People often use them to create a nest-egg for the future.

  • Give Priority to Life Insurance: The crucial choice is to ascertain the appropriate level of life insurance coverage. This will establish the foundation of your IUL policy. It is trendy on social media to find people suggesting the best IULs are always “max-funded” but this really is not so. Each case is different.

Identifying the Right Amount for Your Life Insurance Coverage
  • Monetary Responsibilities: Evaluate your liabilities, such as home loans, and anticipated costs for your beneficiaries.

  • Substituting Income: Determine the amount of money your family would require to sustain their lifestyle if the potential insured were to die.

Understand the Cash Value Component

The cash value component is the main ingredient of your IUL account. The Accumulated Cash Value is is the savings element of your Indexed Universal Life (IUL) policy that grows over time. Your profits are typically tied to the performance of a market index. IULs are frequently seen as a safeguard in your comprehensive retirement plan as they provide a minimum guaranteed interest rate, offering protection even in times of market decline. You might have the option to tap into this cash value via policy loans or withdrawals. However, we would seldom, if at all, suggest a withdrawal.

Engage a Licensed Insurance Agent

Work with an IUL specialist here at We work with multiple IUL carriers and we can explain details and help you select a policy that aligns with your goals.

Assess IUL Qualification Criteria

To establish an IUL account, you must satisfy certain conditions set by the life insurance company. Here's an overview of the usual elements:

  • Age and Health: Each insurance company has their own age and health guidelines. Medical exams may be required. Before you go for the medical check-up, make sure to have a conversation with your insurance representative about any existing health conditions you may have.

  • Residency and Occupation: Your residency / citizenship status may affect the initial value of your policy and whether or not a medical exam will be required at your initial face amount.

The underwriting process will decide your qualification for an IUL policy.

Fill Out an Application

Your IUL expert at will guide you in completing the application for your indexed universal life insurance policy. It is a somewhat detailed process. Your representative will meticulously assist you to guarantee that all documents are filled out correctly, precisely, and honestly. It’s always best to transfer information correctly the first time. Wrong or incomplete information leads to unnecessary delays and amendments.

Undergo a Medical Exam

A lot of times an insurance company may opt to do a telephone medical interview instead of a full medical exam to discuss your personal and family medical history. With your social security number, case managers can access your MIB reports to assess whether they prefer you to have a medical exam. Persons over 60 years old often must have a medical evaluation, in which case the insurance company usually covers any fees. A full medical evaluation may involve blood tests, urine tests, and more. Be ready to share information about your prescriptions, recent hospital stays, and even regular health check-ups.

Getting Ready for Your Health Examination

To get the best results and possibly secure the most favorable life insurance premiums, maintain your health prior to the examination. Here's what you should do:

  • Steer clear of alcohol: Avoid consuming alcohol for at least a few days before your examination.

  • Stay hydrated: Consume ample water the evening before and the morning of your health evaluation.

  • Fast: Refrain from eating for 12 hours prior to your health check-up to ensure precise test outcomes.

  • Rest well: Ensure a good night's sleep before the check-up to help you stay calm.

Evaluate your Proposal and Select Your Policy

If your application gets approved, meticulously go through your proposals with your life insurance representative. Should you find the terms of the life policy unclear, ask your IUL specialist to clarify them. This will enable you to choose the policy that best aligns with your requirements, offering the most suitable features and benefits.

Plan your Premiums

It's imperative to ensure your premiums fit comfortably within your budget. This will aid in avoiding possible gaps in coverage resulting from unpaid bills. It would be self-defeating to start a policy with a premium you just can’t really afford only to have to cancel the policy months later.  

IULs offer flexible premiums. Your policy will remain active even if a payment is missed or delayed, provided your policy maintains a positive balance.

Factors to Consider When Selecting an IUL Funding Approach

Your funding method for your IUL should align with your overarching financial objectives for the policy. Let's delve into the two primary funding alternatives:

  1. Single-Pay: This method involves making a single, substantial payment. It's a suitable option if you have immediate access to funds and aim to optimize potential growth within the policy.

  2. Multi-Pay: This provides more adaptability by distributing payments over a predetermined period (e.g., five, 10, 20 years, or longer). It's a popular option if you prefer to handle the cost of coverage in installments.

The optimal funding method for your universal life policy will hinge on your individual financial circumstances and the specific goals you have for your policy.

Finalize the Application and Schedule Payments

When you're prepared to proceed, finalize the application. To avoid missing any payments, schedule a reminder in your calendar. Many insurance companies will set up automatic premium contributions to fund your IUL account.

What is the duration required to establish an IUL account?

Some insurance companies offer an instant-approval application, but most involve full underwriting. The process of opening an IUL insurance account can take several weeks if it’s not an instant-approval policy so the timeline can vary. Here's a basic outline of the elements involved:

  • Preliminary Meeting & Application: This involves a discussion with your IUL expert about your requirements and filling out the application. This process can range from a few hours to a week.

  • Underwriting: The insurance firm evaluates your health and risk status. This usually lasts 12 weeks and may involve a medical check-up and scrutiny of your health history.

  • Policy Approval & Setup: Once approved, the insurer will issue the policy and set up your IUL account within about a week.

Important Notes:

  • Health Considerations: Factors such as height, weight, or any pre-existing health conditions may prolong the underwriting procedure.

  • Variation Among Insurers: The processing duration varies among different insurance firms.

Suggestions for Accelerating the Procedure:

  • Engage a seasoned life insurance agent: IUL experts at can assist you effectively.

  • Stay ready: Ensure you have all the required documents and data prepared for your discussions with your agent.

  • Prepare well: Your life insurance medical examination is crucial so make sure you are well-prepared.

  • Respond quickly: Promptly respond to any questions from your insurance provider. Insurance applications must be completed within a timeframe once started or they will be deemed as abandoned. Don’t procrastinate in submitting the requested information. 

Monitor and Manage Your Policy

Review your policy annually with your IUL specialist to make informed adjustments and optimize your policy's features and its potential cash value accumulation.


There are several crucial steps involved in setting up an Indexed Universal Life Insurance (IUL) account. These include carefully considering your life insurance needs and understanding your credit allocation options.

Careful planning and expert guidance are essential to ensure you make the best choices for the coverage, index allocation strategies, and premium payments when opening your IUL account.

IULs are excellent products for wealth creation. They require time for the benefits of compound interest to take affect. So they are not for everybody. They are probably more ideal for clients under 55 years old, but depending on your reason for opening an IUL, they can still be appropriate for older clients too. Contact an IUL specialist today at for personalized assistance. We'll assist you in the process of opening an account, respond to your inquiries, and aid you in obtaining an IUL policy that optimizes the financial safeguard and growth prospects you desire.

Commonly Asked Questions

Q: What is the initial amount required to establish an IUL policy?

A: We believe saving 1220% of your income for the future is a solid strategy. That said, everyone’s budget is different. A rule of thumb about minimums we go by is typically $100 for a teenager, $200 for 20s, $300 for 30s, $400 for 40s, $500 for 50’ and so on. These are our recommended minimums. If you’re 40 years old and your budget will only allow $200 per month, it may still be worth your commitment. Saving something is better than saving nothing. 

Q: Is it possible to obtain an IUL with pre-existing health issues?

A: Yes, we work with patients with various types of pre-existing conditions, including high blood pressure, diabetes etc. Insurance companies evaluate on a case-by-case basis.

Q: What is the age criteria to establish an IUL?

A. Parents and grandparents can open accounts on their grand/children. The insured person usually must be at least 15 days old. The adult will own the policy. You must be at least 18 years old to own an IUL policy.

Q: Is it possible to alter my premium payments or coverage value at a later stage with an IUL policy?

A: Yes, each insurance company is different, but IULs inherently offer flexible premiums. And death benefit coverage can usually be adjusted within limits. Most times, an increase in coverage will require underwriting for insurability.

Q: What paperwork is required for an IUL application?

A: When submitting an application for an IUL policy, ensure you have the following documents:

  • Proof of Identity: A photo ID issued by the government (such as a driver's license or passport).

  • Medical Records: Your insurer may request medical records as well as your current doctor, hospital, or clinic.

  • Motor Vehicle Report: Your insurer may request your MVR to ensure your life risk on the road.

  • Medical Exam: A medical exam may or may not be required for your policy.

  • Citizenship Status: Some insurance companies will issue policies for non-citizens providing they have an itin, or W8-BEN.

  • Recipient Details: Information about the individual(s) assigned to obtain the death benefit.

  • Completed Form: The filled-out IUL application document containing your personal and financial data.

Q: What is the process to obtain an IUL quote?

A: Use the chatbot on to set an appointment or call our 844.711.1130 to speak to one of our representatives.

Thanks for reading: How to Open an Indexed Universal Life Account (IUL) - A Comprehensive Guide.



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