Like other kinds of permanent insurance, indexed universal life offers a benefit and a brokerage account. The benefit is decided at the start of the policy, but can change. The brokerage account supports the performance of an index number.
Insurance companies choose one or more of those and pay interest to policyholders supporting the index’s performance, and as value goes up, the account gets interest. If the index drops, the account earns less or nothing.
Cash accounts are initially funded through premium payments. After the value of insurance paying for your death benefit, rider charges and other fees start up, the remainder is added to your brokerage account. If you ever arrange to not make a payment or underpay, those fees are often taken directly from the account.