{
  "id": "iul",
  "version": "cef27a57107a",
  "status": "published",
  "name": "IUL Calculator",
  "question": "How much could my IUL policy grow?",
  "summary": "Estimates the cash value of an indexed universal life (IUL) policy from the premiums, the index return, the cap, the floor, the participation rate and the yearly charges, against the same money at the index return.",
  "category": "finance",
  "subcategory": "retirement",
  "url": "https://www.acalculator.org/finance/iul-calculator",
  "markdown": "https://www.acalculator.org/finance/iul-calculator.md",
  "kind": "schedule",
  "method": "rate = max(floor, min(cap, participation × index)); each year: start = value + premium; credit = start × rate; charge = (start + credit) × charges; value = start + credit − charge.",
  "assumptions": [
    "The index return, cap, floor, participation rate and charges stay the same every year. Insurers can change caps and participation rates, and real index returns vary, which a constant return does not show.",
    "Charges are one yearly percent of the cash value. Real cost of insurance rises with age and is charged monthly; surrender charges, loans and withdrawals are not included.",
    "This is an estimate, not an insurance illustration. Ask the insurer for an illustration that follows Actuarial Guideline 49-A."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "premium": {
        "title": "Premium each year",
        "description": "The premium you pay at the start of each policy year.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 100000000
      },
      "pay": {
        "title": "Years you pay premiums",
        "description": "How many years you pay the premium.",
        "type": "integer",
        "minimum": 1,
        "maximum": 80
      },
      "years": {
        "title": "Years to project",
        "description": "How many policy years to show.",
        "type": "integer",
        "minimum": 1,
        "maximum": 80
      },
      "index": {
        "title": "Index return each year",
        "description": "The yearly change in the stock index, before the cap and floor. It is the same every year here.",
        "type": "number",
        "x-unit": "percent",
        "minimum": -50,
        "maximum": 50
      },
      "cap": {
        "title": "Cap rate",
        "description": "The most the policy credits in a year.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 50
      },
      "floor": {
        "title": "Floor rate",
        "description": "The least the policy credits in a year, often 0%.",
        "type": "number",
        "x-unit": "percent",
        "minimum": -20,
        "maximum": 20
      },
      "par": {
        "title": "Participation rate",
        "description": "The share of the index return used to work out the credit.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 300
      },
      "charges": {
        "title": "Yearly policy charges",
        "description": "The cost of insurance, policy fees and other charges, as a percent of the cash value each year. Your illustration shows them.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 20
      }
    }
  },
  "outputs": {
    "value": {
      "label": "Cash value at the end",
      "description": "The policy’s cash value after the last year shown, before any surrender charge.",
      "format": "money"
    },
    "rate": {
      "label": "Credited rate each year",
      "description": "max(floor, min(cap, participation × index return)).",
      "format": "percent"
    },
    "premiums": {
      "label": "Premiums paid",
      "description": "All the premiums added up.",
      "format": "money"
    },
    "credits": {
      "label": "Interest credited",
      "description": "All the index credits added up.",
      "format": "money"
    },
    "charges": {
      "label": "Charges taken",
      "description": "All the policy charges added up.",
      "format": "money"
    },
    "index": {
      "label": "Same premiums at the index return",
      "description": "The premiums growing at the full index return with no cap, floor or charges.",
      "format": "money"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "premium": 10000,
      "pay": 20,
      "years": 30,
      "index": 7,
      "cap": 10,
      "floor": 0,
      "par": 100,
      "charges": 1
    },
    "outputs": {
      "value": 688050.4464171344,
      "rate": 7,
      "premiums": 200000,
      "credits": 576113.5117908834,
      "charges": 88063.06537374934,
      "index": 862894.4204783635
    },
    "text": "$10,000.00 a year at a 7% credited rate grows to a cash value of $688,050.45."
  },
  "examples": [
    {
      "given": {
        "premium": 10000,
        "pay": 20,
        "years": 30,
        "index": 7,
        "cap": 10,
        "floor": 0,
        "par": 100,
        "charges": 1
      },
      "expect": {
        "value": 688050.4464171344,
        "rate": 7,
        "premiums": 200000,
        "credits": 576113.5117908835,
        "charges": 88063.06537374934,
        "index": 862894.4204783635
      },
      "source": "year by year in content.mdx, checked in Python; credit rule: FINRA, The Complicated Risks and Rewards of Indexed Annuities (participation rates, interest caps and floors limit the index-linked return), https://www.finra.org/investors/insights/complicated-risks-and-rewards-indexed-annuities (retrieved 2026-10-03); an estimate, not an illustration: National Association of Insurance Commissioners, Life Insurance Illustrations (Actuarial Guideline 49-A limits the rates an indexed universal life illustration may show), https://content.naic.org/insurance-topics/life-insurance-illustrations (retrieved 2026-10-03)"
    },
    {
      "given": {
        "premium": 5000,
        "pay": 10,
        "years": 10,
        "index": 12,
        "cap": 7,
        "floor": 0,
        "par": 100,
        "charges": 0
      },
      "expect": {
        "rate": 7,
        "value": 73917.99659284537,
        "index": 98272.91638939647
      },
      "source": "FINRA’s example: an index up 12% with a 7% cap credits 7%: FINRA, The Complicated Risks and Rewards of Indexed Annuities (participation rates, interest caps and floors limit the index-linked return), https://www.finra.org/investors/insights/complicated-risks-and-rewards-indexed-annuities (retrieved 2026-10-03); checked in Python"
    },
    {
      "given": {
        "premium": 1000,
        "pay": 1,
        "years": 2,
        "index": -10,
        "cap": 10,
        "floor": 0,
        "par": 100,
        "charges": 0
      },
      "expect": {
        "rate": 0,
        "value": 1000,
        "index": 810
      },
      "source": "the floor holds a −10% index year at 0%: FINRA, The Complicated Risks and Rewards of Indexed Annuities (participation rates, interest caps and floors limit the index-linked return), https://www.finra.org/investors/insights/complicated-risks-and-rewards-indexed-annuities (retrieved 2026-10-03); hand calculation in content.mdx"
    },
    {
      "given": {
        "premium": 1000,
        "pay": 3,
        "years": 3,
        "index": 8,
        "cap": 10,
        "floor": 1,
        "par": 50,
        "charges": 2
      },
      "expect": {
        "rate": 4,
        "value": 3116.6816378880003,
        "charges": 126.40510771199999
      },
      "source": "a 50% participation rate credits half of 8%: FINRA, The Complicated Risks and Rewards of Indexed Annuities (participation rates, interest caps and floors limit the index-linked return), https://www.finra.org/investors/insights/complicated-risks-and-rewards-indexed-annuities (retrieved 2026-10-03); hand calculation in content.mdx"
    }
  ],
  "sources": [
    "FINRA, The Complicated Risks and Rewards of Indexed Annuities: participation rates, caps and floors, and contracts that let the issuer change them. https://www.finra.org/investors/insights/complicated-risks-and-rewards-indexed-annuities (retrieved 2026-10-03)",
    "National Association of Insurance Commissioners, Life Insurance Illustrations: Actuarial Guideline XLIX and 49-A for policies with index-based interest. https://content.naic.org/insurance-topics/life-insurance-illustrations (retrieved 2026-10-03)"
  ],
  "related": [
    "life-insurance",
    "annuity",
    "compound-interest"
  ],
  "changelog": []
}