What's the difference between IUL and term life insurance?

Question

Jim Mentink · Accepted Answer

An indexed universal life policy is a permanent policy.  A term life policy is coverage that lasts for a 'term', which is a set amount of time usually ranging from 10-30 years (not all carriers have terms that long but that's a general guideline).

IULs can earn cash value and a lot of folks do get a policy for children, for instance, so the value can grow over a lifetime.  IULs are tied to index performance and will experience gains, and many have a 0% floor to protect policyholders from loss.

Term life is for a period of years and if renewed the policyholder will pay more for the next term, though some policies can be converted and others do offer a return-of-premium.

Dean Chiapetto · Answer

Term is temporary insurance, it last a certain length of time, 10, 20, or 30 years.
Indexed Universal Life is a Permanent policy and can be set up many different ways. These policies are used for anything from pure death benefit to funding retirement. Find a qualified Life insurance broker who can find out what your requirements are and guide you to the right policy for your situation.
Brokers Make A Difference!

Melanie Blackston · Answer

Indexed Universal Life (IUL) insurance provides lifelong coverage with an equity-indexed cash value component, whereas term life insurance offers affordable, temporary protection for a set number of years without any cash value savings.

Answered by Melanie Blackston on August 26, 2026

Broker Licensed in SC, GA & NC

Answered by Melanie Blackston Life Insurance Agent

Andy Kelly · Answer

Term life provides affordable coverage for a specific period—typically 10, 20, or 30 years. It’s a great option when the primary goal is protecting income, family, or a mortgage.

IUL (Indexed Universal Life) is permanent life insurance that also builds cash value, with interest-crediting potential linked to a market index (without directly investing in the market). It costs more but can provide lifelong protection and potential access to accumulated cash value.

Neither is inherently better—the right choice depends on client needs, budget, and long-term goals.

Sandra Bailey · Answer

IUL/ indexed universal life insurance is a type of permanent life insurance.  Permanent means it does not expire. Well, the policy will show it will run through age 120 years old as no one has lived that long. IULs can build up cash value.  
Another type of permanent life insurance is WL/Whole life. 
Permanent life insurance premiums normally stay the same. They do not increase. 

Term life insurance last for a specific period of time. For example: 10 years to 30 years, depending on your age. When the term expires, you no longer have coverage, the policy expires or ends. Term life does not build cash value. 
Some term policies are convertible. Which means you can convert the term to a permanent policy during a certain timeframe. 

Be careful as some term policies may increase & become unaffordable. 
ART- annual renewable term, increases each year. Some term plans may increase every 5 years. Just be sure to purchase a level term premium where the premium will not increase. 

So remember, there only 2 types of life insurance. Term & Permanent. 
Permanent plans can be WL, UL, or IUL

Tamekia Mckinnie · Answer

Index Universal has more benefits than a term, comparable in pricing but not the same at all with regards to length or death benefits. 

Term ends at the end of the agreed term- 
This typically is written for a small monthly or annual premium and the death benefit is coverage needed for a time period where real cost and expenses are higher than a typical burial plan would be. 

At the end of the day, at the funeral home, no one knows if the beneficiaries had term or perm. But the living benefits are what set the IUL apart from term. For many years but term and invest the rest was a recommendation from Susie and Dave- but there wasn’t a solution- the IUL offers this solution. 

Many come with living benefits and cash value that is accessible unlike the term competitor. 
Only it’s not full Whole life, so provided the indexes results and the payor’s commitment to keeping up with the payments- it can be a solution.