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The new indexed universal life insurance is a flexible premium policy that credits interest based on the movement of a stock market index. These products offer the security of lifetime death benefit protection along with great flexibility through access to policy cash value. The basic life insurance has been around for hundreds of years, but this is one of the newest products in the market.

It’s a product with more upside potential than traditional fixed universal life—especially in a low-interest rate environment—that also offers strong guarantees, eliminating downside market risk associated with a variable universal life product.

Indexed universal life policy performance is typically linked, in part, to a major stock index such as the S&P 500. Generally, these policies include a cap on the upside movement of the index, typically ranging between 10 and 14 percent, as well as a minimum interest rate that is applicable should the index perform poorly during a particular period.

Through the first three quarters of 2011, the life insurance industry saw modest 5 percent growth. Indexed universal life sales, however, grew a whopping 38 percent over the same nine-month period. The only other life insurance product hitting double-digit sales increase during that time frame was whole life, with a 10 percent jump.