How Does Index Universal Life Insurance Work? 
Index Universal Life Insurance allows you to allocate cash value in the policy to either a fixed account , an equity index account , or both . You are guaranteed not to lose your principal , even if the market drops . But your earnings are capped at lower than what you might earn if you were willing to risk the principal in a variable product . IUL is popular for those who want life insurance , want to take some advantage of the market , and do not want the risk of losing their investment . 