Understanding GLBs, Death Benefits & Cash Value in IUL Policies

Life insurance can feel complicated, especially when comparing different policy types. Indexed Universal Life (IUL) insurance stands out because it offers flexibility, growth potential, and long-term protection. In this article, we break down the key parts of an IUL policy—Guaranteed Lifetime Benefits (GLBs), death benefits, and cash value—so you can clearly understand how these features work and whether an IUL fits your financial goals.

What Is Indexed Universal Life (IUL) Insurance?

IUL insurance is a type of permanent life insurance that includes:

• A death benefit that protects your loved ones
• A cash value account that can grow based on the performance of a market index (like the S&P 500)

Unlike traditional life insurance, an IUL allows your cash value to grow with the market—without exposing you to full market losses thanks to built-in floors. IULs are also known for their flexibility. You can adjust premiums and even change the death benefit as your needs evolve.

What Are Guaranteed Lifetime Benefits (GLBs)?

Guaranteed Lifetime Benefits are an optional feature available in some IUL policies that provide financial security for life, regardless of how long you live or how the market performs.

What GLBs Typically Include:

✔ Guaranteed Minimum Death Benefit

Your beneficiaries are guaranteed to receive a minimum death benefit, even if the market underperforms. This protects your family from uncertainty.

✔ Guaranteed Lifetime Income (in some policies)

Some GLBs offer a lifetime income stream—similar to an annuity—that can provide predictable cash flow during retirement.

These guarantees can offer peace of mind, especially for policyholders planning long-term financial security.

Understanding Death Benefits in IUL Policies

The death benefit is the core of every life insurance policy. With IUL, you can choose between two structures:

1. Level Death Benefit

The payout stays the same throughout the policy.

• Simple
• Predictable
• Often results in lower long-term costs

2. Increasing Death Benefit

The death benefit rises over time as cash value grows.

• Helps offset inflation
• Can provide a larger legacy for beneficiaries

This choice impacts long-term performance, cost, and final payout—making it an important decision during policy setup.

How Cash Value Works in an IUL

The cash value is a built-in savings component that grows based on a stock market index.

How Growth Happens

A portion of each premium payment goes into the cash value account. The insurer then credits interest based on index performance, subject to:

• Floors (typically 0%) to prevent losses
• Caps or participation rates that limit or adjust how much of the index gain you receive

Accessing Your Cash Value

Cash value isn’t just for long-term growth—you can use it during your lifetime:

• Take policy loans
• Withdraw funds
• Supplement retirement income
• Cover emergencies

Just remember: loans or withdrawals reduce the death benefit if not repaid.

Why People Choose IUL Insurance

IUL policies offer a rare blend of life insurance protection and financial growth opportunities.

Key Advantages:

✔ Flexibility

Adjust premiums and death benefits as your financial life changes.

✔ Growth Potential

Market-linked cash value offers higher upside than traditional whole life.

✔ Protection & Guarantees

GLBs ensure long-term stability—even in poor market conditions.

This combination makes IUL an attractive strategy for people who want both protection and wealth-building potential.

Is an IUL Policy Right for You?

Choosing an IUL depends on your long-term financial goals. It’s a great option if you want:

• Lifelong coverage
• Growth potential with downside protection
• Access to a cash value you can use throughout life
• Optional guarantees that provide security

Before starting an IUL, consider speaking with a financial professional to ensure it fits into your overall strategy.

Final Thoughts

Indexed Universal Life insurance offers a powerful mix of life insurance protection, cash value growth, and long-term guarantees. By understanding features like GLBs, death benefit structures, and how cash value works, you can make a confident decision about whether an IUL supports your financial future.

With the right planning and ongoing management, an IUL can help you build wealth, protect your family, and create lasting financial security.