Estimate the growth of your Indexed Universal Life Insurance policy cash value.
Years of Accumulation:0
Total Premiums Paid:$0
Effective Annual Credit Rate:0%
Projected Cash Value at Retirement:$0
Understanding Indexed Universal Life (IUL) Calculations
An Indexed Universal Life (IUL) insurance policy is a unique financial instrument that combines permanent life insurance protection with a cash value component that grows based on the performance of a market index, such as the S&P 500. Unlike direct market investments, IULs provide a "floor" (usually 0%) to protect against market losses, while also imposing a "cap" on the maximum gains you can receive in a single period.
Key Variables Explained
Cap Rate: The maximum interest rate the insurance company will credit to your cash value, regardless of how high the index climbs.
Floor Rate: The minimum interest rate guaranteed. This is typically 0%, meaning if the market drops 20%, your cash value credited interest remains at 0% rather than losing value.
Participation Rate: The percentage of the index's return that is used to calculate the interest. If the index returns 10% and your participation rate is 80%, your credited rate (before caps) would be 8%.
Cost of Insurance (COI): These are the internal fees within the policy that cover the death benefit and administrative expenses. These must be subtracted for an accurate projection.
How This Projection Works
This calculator performs a year-over-year compound interest calculation. For every year between your current age and your target retirement age, it applies the following logic:
Calculates the raw index return based on your market assumption.
Applies the Participation Rate to that return.
Adjusts the result to fit within the Cap and Floor boundaries.
Subtracts the estimated annual fees/cost of insurance.
Adds your annual premium and compounds the total balance.
Example Scenario
If a 35-year-old contributes $12,000 annually into an IUL with a 10% cap and a 0% floor, assuming a consistent 7% market return and 1.5% in internal costs, the effective annual growth rate is roughly 5.5%. Over 30 years, this disciplined accumulation can result in a significant tax-advantaged cash nest egg that can be accessed via policy loans in retirement.
function calculateIUL() {
var currentAge = parseInt(document.getElementById('currentAge').value);
var targetAge = parseInt(document.getElementById('targetAge').value);
var annualPremium = parseFloat(document.getElementById('annualPremium').value);
var initialCash = parseFloat(document.getElementById('initialCash').value);
var capRate = parseFloat(document.getElementById('capRate').value) / 100;
var floorRate = parseFloat(document.getElementById('floorRate').value) / 100;
var participationRate = parseFloat(document.getElementById('participationRate').value) / 100;
var marketReturn = parseFloat(document.getElementById('marketReturn').value) / 100;
var feeRate = parseFloat(document.getElementById('feeRate').value) / 100;
if (isNaN(currentAge) || isNaN(targetAge) || isNaN(annualPremium) || targetAge capRate) creditedRate = capRate;
if (creditedRate < floorRate) creditedRate = floorRate;
// Calculate effective net rate (credited rate minus fees)
// Note: Simplification used: fees applied to balance annually
for (var i = 0; i < years; i++) {
balance += annualPremium;
totalPremiums += annualPremium;
// Apply growth
var growth = balance * creditedRate;
balance += growth;
// Deduct fees
var fees = balance * feeRate;
balance -= fees;
if (balance < 0) balance = 0;
}
// Update UI
document.getElementById('resultsArea').style.display = 'block';
document.getElementById('resYears').innerText = years + " years";
document.getElementById('resTotalPremiums').innerText = "$" + totalPremiums.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resEffectiveRate').innerText = (creditedRate * 100).toFixed(2) + "%";
document.getElementById('resFinalValue').innerText = "$" + balance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}