How Does Equity Indexed Universal Life Insurance Work? 
Indexed universal life uses domestic and foreign indices with crediting methods : cap rates , participation rates and spread rates . The life insurance company generally purchases index options . If the options are exercised a positive credit is applied . If the options are not exercised , then nothing is credited . Like all life insurance policies , index universal life has policy fess , expenses and cost of insurance that is deducted from the premium . Then the credit , if any , is applied . 