It's the Hottest Thing in Life Insurance. Are Buyers Aware of the Risks?
Sales of a life-insurance policy tied to the longest bull market in U.S. history are soaring. Regulators worry that buyers are unprepared for a crash. Indexed universal life is one of the insurance industry's hottest products. It accounted for a quarter of all individual life sales as measured by premium for the first nine months of 2019, according to research firm Limra, up from 20% in 2014. Before the decade long stock market boom, these policies were just 4% of sales in 2008. The product's appeal is that it promises annual interest based on formulas tied to stock indexes like the S&P 500 as well as protection against losses. Some policies offer newer features known as "multipliers" that promise even higher annual interest, for higher prices. Costs vary across companies' product lineups and industry wide.