FAQ

Welcome to The Hendrickson Brokerage, where we specialize in addressing the most common queries about insurance products like the F&G Pathsetter and Everlast Indexed Universal Life (IUL) policies. With our comprehensive knowledge and experience, we’re here to guide you through the intricacies of IUL and provide clarity on its benefits and features. Let’s delve into the top 50 questions individuals frequently ask about the available IUL policies.

What is Indexed Universal Life (IUL) Insurance?
- Indexed Universal Life (IUL) insurance is a type of permanent life insurance policy that offers a death benefit and a cash value component. It allows policyholders to allocate a portion of their premiums to indexed accounts tied to market indices, offering potential for cash value growth.
How does Indexed Universal Life (IUL) differ from other types of life insurance?
- Unlike traditional whole life insurance, IUL offers flexibility in premium payments and potential for higher cash value growth through indexed accounts. It combines elements of traditional whole life insurance with the opportunity for cash value growth linked to market performance.
What are the key benefits of Indexed Universal Life (IUL) insurance?
- The benefits include a death benefit for beneficiaries, potential cash value accumulation, tax-deferred growth, flexibility in premium payments, and the ability to access cash value through loans or withdrawals.
How does the cash value component of Indexed Universal Life (IUL) work?
- A portion of the premium payments is allocated to the cash value account, which grows over time based on credited interest linked to the performance of selected market indices. The cash value can be accessed during the policyholder’s lifetime through loans or withdrawals.
Are the cash value gains in Indexed Universal Life (IUL) subject to taxation?
- Generally, the cash value gains in an IUL policy grow tax-deferred, meaning policyholders don’t pay taxes on the gains until they make withdrawals or surrender the policy. However, it’s essential to consult with a tax advisor for personalized advice.
What are indexed accounts in Indexed Universal Life (IUL) policies?
- Indexed accounts are investment options within an IUL policy where the cash value grows based on the performance of selected market indices, such as the S&P 500 or Nasdaq. The interest credited to these accounts is typically subject to a cap and a floor, ensuring a minimum interest rate.
How is the interest credited to indexed accounts calculated?
- The interest credited to indexed accounts is typically calculated based on the performance of the selected market index over a specific period, such as a one-year term. Some policies may use a participation rate, cap rate, or other factors to determine the credited interest.
What is the participation rate in Indexed Universal Life (IUL) policies?
- The participation rate is the percentage of the index’s return that the insurance company credits to the cash value in indexed accounts. For example, if the participation rate is 80%, and the index returns 10%, the credited interest would be 8%.
What is the cap rate in Indexed Universal Life (IUL) policies?
- The cap rate is the maximum rate of interest that the insurance company will credit to the cash value in indexed accounts, regardless of the actual performance of the selected market index. If the index’s return exceeds the cap rate, the credited interest is capped at that rate.
Are there any guarantees associated with Indexed Universal Life (IUL) policies?
- While the cash value growth in indexed accounts is subject to market performance, many IUL policies offer a minimum guaranteed interest rate, ensuring that the cash value won’t decrease even if the market performs poorly.
Can the premiums in an Indexed Universal Life (IUL) policy be adjusted?
- Yes, one of the key features of IUL is premium flexibility. Policyholders can adjust their premiums within certain limits, allowing them to increase, decrease, or even skip premium payments depending on their financial circumstances.
What happens if I miss a premium payment in my Indexed Universal Life (IUL) policy?
- Most IUL policies offer a grace period during which policyholders can make up missed premium payments without losing coverage. If the premiums remain unpaid after the grace period, the policy may lapse, and coverage may be terminated.
Are loans available against the cash value in an Indexed Universal Life (IUL) policy?
- Yes, policyholders can typically take out loans against the cash value in their IUL policy. These loans accrue interest and must be repaid, either from future premium payments or from the death benefit if not repaid during the policyholder’s lifetime.
Are withdrawals allowed from the cash value in an Indexed Universal Life (IUL) policy?
- Yes, policyholders can generally make withdrawals from the cash value in their IUL policy. However, withdrawals may reduce the death benefit and cash value, and any outstanding loans against the policy must be repaid first.
Can the death benefit in an Indexed Universal Life (IUL) policy be adjusted?
- Yes, policyholders can often adjust the death benefit within certain limits, allowing them to increase or decrease the coverage amount based on their changing needs.
How are surrender charges applied in Indexed Universal Life (IUL) policies?
- Surrender charges may apply if the policyholder surrenders or cancels the policy during the surrender charge period, which is typically the first several years of the policy. These charges are designed to recoup the insurance company’s initial expenses.
Is Indexed Universal Life (IUL) insurance suitable for everyone?
- While IUL offers flexibility and potential for cash value growth, it may not be suitable for everyone. It’s essential to consider factors such as financial goals, risk tolerance, and long-term needs before purchasing an IUL policy.
What are the fees associated with Indexed Universal Life (IUL) policies?
- Indexed Universal Life (IUL) policies may have various fees, including cost of insurance charges, administrative fees, and rider fees. It’s essential to review the policy’s prospectus carefully to understand the fees involved.
Can the premiums in an Indexed Universal Life (IUL) policy increase over time?
- While some IUL policies offer level premiums for the life of the policy, others may have premiums that can increase over time, particularly if the policyholder opts for a flexible premium payment schedule.
How is the death benefit distributed in an Indexed Universal Life (IUL) policy?
- The death benefit in an IUL policy is typically paid to the policy’s beneficiaries tax-free upon the insured’s death. The beneficiaries can choose to receive the death benefit as a lump sum or in periodic installments.
What are the tax advantages of Indexed Universal Life (IUL) insurance?
- The cash value growth in an IUL policy is tax-deferred, meaning policyholders don’t pay taxes on the gains until they make withdrawals or surrender the policy. Additionally, the death benefit is generally paid out to beneficiaries tax-free.
How does Indexed Universal Life (IUL) insurance fit into retirement planning?
- IUL insurance can be a valuable tool in retirement planning, offering potential for cash value accumulation and tax-free income through policy loans or withdrawals. It can supplement other retirement income sources and provide financial security in retirement.
Can the cash value in an Indexed Universal Life (IUL) policy be used to supplement retirement income?
- Yes, policyholders can access the cash value in their IUL policy through loans or withdrawals to supplement retirement income. The income generated from policy loans is generally tax-free, providing a tax-efficient source of retirement funds.
What happens to an Indexed Universal Life (IUL) policy if the insured lives beyond the policy’s maturity date?
- If the insured lives beyond the policy’s maturity date, the death benefit is typically paid out to the policy’s beneficiaries tax-free. Additionally, policyholders may have the option to extend coverage or convert the policy to a different form of coverage.
Are there any restrictions on how the cash value in an Indexed Universal Life (IUL) policy can be used?
- There are typically no restrictions on how policyholders can use the cash value in their IUL policy. They can use it for any purpose, such as supplementing retirement income, funding education expenses, or covering unexpected expenses.
Can Indexed Universal Life (IUL) insurance be used as a wealth transfer strategy?
- Yes, IUL insurance can be an effective wealth transfer strategy, allowing policyholders to pass on a tax-free death benefit to their beneficiaries. It can help preserve wealth and provide financial security for future generations.
What factors should I consider when purchasing an Indexed Universal Life (IUL) policy?
- When purchasing an IUL policy, it’s essential to consider factors such as the policy’s fees and charges, the insurer’s financial strength and reputation, the performance of the indexed accounts, and how the policy aligns with your financial goals and risk tolerance.
How can I determine if an Indexed Universal Life (IUL) policy is suitable for me?
- Determining the suitability of an IUL policy requires evaluating your financial goals, risk tolerance, and long-term needs. Consulting with a financial advisor or insurance professional can help you assess whether an IUL policy aligns with your objectives.
What are the potential risks associated with Indexed Universal Life (IUL) insurance?
- While IUL insurance offers potential for cash value growth, there are risks to consider, such as market volatility, policy fees and charges, and the potential for policy lapses if premium payments are not maintained.
How can I monitor the performance of the indexed accounts in my Indexed Universal Life (IUL) policy?
- Policyholders can typically monitor the performance of the indexed accounts in their IUL policy through periodic statements provided by the insurance company. These statements may show the credited interest rates, account values, and other relevant information.
Are there any tax implications if I surrender or lapse my Indexed Universal Life (IUL) policy?
- Surrendering or lapsing an IUL policy may have tax implications, particularly if the cash value exceeds the total premiums paid into the policy. Any gains above the premiums paid may be subject to ordinary income tax.
Can I convert an existing life insurance policy to an Indexed Universal Life (IUL) policy?
- Yes, it may be possible to convert an existing life insurance policy, such as a term or whole life policy, to an IUL policy through a process known as a 1035 exchange. This allows policyholders to transfer the cash value from one policy to another without triggering a taxable event.
How can I fund an Indexed Universal Life (IUL) policy?
- Indexed Universal Life (IUL) policies can be funded through periodic premium payments, which can be adjusted based on the policyholder’s financial circumstances. Additionally, policyholders may have the option to make lump-sum premium payments or fund the policy through a 1035 exchange.
Are there any restrictions on when I can access the cash value in my Indexed Universal Life (IUL) policy?
- Generally, policyholders can access the cash value in their IUL policy at any time through loans or withdrawals, subject to certain limitations and restrictions outlined in the policy contract.
Can I transfer ownership of my Indexed Universal Life (IUL) policy to another individual?
- Yes, policyholders can typically transfer ownership of their IUL policy to another individual, such as a family member or trust, through a process known as an ownership transfer. This may involve completing paperwork and obtaining consent from the new owner.
How does the death benefit in an Indexed Universal Life (IUL) policy differ from term life insurance?
- Unlike term life insurance, which provides coverage for a specific period, the death benefit in an IUL policy is permanent and guaranteed as long as the policy remains in force and premiums are paid.
Can I borrow against the cash value in my Indexed Universal Life (IUL) policy to pay for college expenses?
- Yes, policyholders can use the cash value in their IUL policy to fund college expenses through policy loans. These loans can provide tax-free income to cover tuition, room and board, and other education-related costs.
What happens if I surrender my Indexed Universal Life (IUL) policy before the maturity date?
- If you surrender your IUL policy before the maturity date, you may receive the cash surrender value, which is the remaining cash value in the policy after any surrender charges or outstanding loans are deducted. Surrendering the policy terminates coverage, and the death benefit is no longer payable.
Can I add riders to my Indexed Universal Life (IUL) policy for additional coverage?
- Yes, many insurance companies offer riders that can be added to an IUL policy for additional coverage and benefits. Common riders include accelerated death benefit riders, long-term care riders, and disability income riders.
How does the cost of insurance in an Indexed Universal Life (IUL) policy impact the cash value growth?
- The cost of insurance in an IUL policy is deducted from the cash value and can impact the overall cash value growth. Higher cost of insurance charges may reduce the amount of cash value available for investment in indexed accounts.
What happens if the indexed accounts in my Indexed Universal Life (IUL) policy underperform?
- If the indexed accounts in your IUL policy underperform, the credited interest rates may be lower than expected, resulting in slower cash value growth. However, many policies offer a minimum guaranteed interest rate to protect against significant losses.
Can I make partial withdrawals from the cash value in my Indexed Universal Life (IUL) policy?
- Yes, policyholders can typically make partial withdrawals from the cash value in their IUL policy to access funds for various purposes. These withdrawals may be subject to surrender charges and could reduce the death benefit and cash value.
How do I choose the indexed accounts for my Indexed Universal Life (IUL) policy?
- When selecting indexed accounts for your IUL policy, consider factors such as historical performance, volatility, and the indexing method used. It’s essential to diversify your investments across multiple indices to mitigate risk and maximize potential returns.
Can I change the allocation of my premiums between indexed accounts and fixed accounts in my Indexed Universal Life (IUL) policy?
- Yes, policyholders can typically adjust the allocation of their premiums between indexed accounts and fixed accounts within certain limits. This allows for flexibility in investment strategy based on market conditions and personal preferences.
What happens if I want to cancel or surrender my Indexed Universal Life (IUL) policy?
- If you want to cancel or surrender your IUL policy, you may receive the cash surrender value, which is the remaining cash value in the policy after any surrender charges or outstanding loans are deducted. Surrendering the policy terminates coverage, and the death benefit is no longer payable.
Can I convert my Indexed Universal Life (IUL) policy to a different type of life insurance?
- Yes, some insurance companies may allow policyholders to convert their IUL policy to a different type of life insurance, such as whole life or variable universal life. This can provide flexibility to adjust coverage and investment options as financial needs change.
How does the indexing method affect the performance of the indexed accounts in my Indexed Universal Life (IUL) policy?
- The indexing method, such as annual point-to-point, monthly sum, or monthly average, can affect how the credited interest rates are calculated in indexed accounts. It’s essential to understand the indexing method used in your policy and how it impacts performance.
Can I use the cash value in my Indexed Universal Life (IUL) policy to pay for long-term care expenses?
- Yes, policyholders can use the cash value in their IUL policy to fund long-term care expenses through policy loans or withdrawals. Additionally, some policies offer long-term care riders that provide accelerated death benefits to cover qualifying long-term care expenses.
How does the death benefit in an Indexed Universal Life (IUL) policy differ from universal life insurance?
- While both IUL and universal life insurance offer permanent coverage and a cash value component, the death benefit in an IUL policy is typically tied to the performance of indexed accounts, offering potential for higher growth based on market performance.
Can I purchase an Indexed Universal Life (IUL) policy without a medical exam?
- Some insurance companies offer simplified issue or guaranteed issue IUL policies that do not require a medical exam for approval. However, these policies may have higher premiums and lower coverage amounts compared to fully underwritten policies that require a medical exam.

The Pathsetter Indexed Universal Life (IUL) policy from F&G stands out as a comprehensive and flexible solution for individuals seeking long-term financial security. With its unique combination of death benefit protection and cash value accumulation linked to market indexes, the F&G IUL policies offer the potential for growth while providing downside protection. Policyholders can benefit from tax-deferred growth, access to cash value through loans or withdrawals, and the flexibility to adjust premiums and coverage as their financial needs evolve. For those looking to secure their family’s financial future while harnessing the power of market growth, an IUL policy is a compelling option to consider.

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