IUL & PPLI · Cross-border structuring
Indexed Universal Life, explained
Protection on the downside, growth on the upside, and access to your capital while you live.
US$25,000,000 cover each · Prepared by Carlton Crabbe, June 2026
0.00%
Guaranteed floor in a falling index year
11.53%
Effective maximum credited rate, Manulife S&P account
70%
Of buyers intend to use the loan facility in their lifetime
What Indexed Universal Life is
Index-linked growth, without market risk.
Indexed Universal Life, or IUL, is permanent life insurance with a cash value that grows by reference to a stock market index such as the S&P 500. Your money is not invested in the market. You own no shares and you carry no direct market risk.
Each year the insurer credits interest to your cash value based on how the chosen index has moved, within agreed limits. In a rising market you share in the gain up to a ceiling. In a falling market the credit is zero, never negative.
Three things at once
A single policy pays a tax-efficient death benefit, builds a cash value that can grow with the market, and lets you borrow against that cash value during your lifetime.
A guaranteed floor and a capped upside
Three numbers define how the cash value grows.
Floor
0.00%
In any year the index falls, the interest credited is zero. Your cash value is never reduced by negative market performance.¹
Cap
9.30%
The most index interest a one-year segment can earn before the multiplier. Manulife's S&P account is currently 9.30%, and the declared rate is guaranteed for the full one-year segment once set.
Multiplier
×1.24
A guaranteed uplift applied to the credited interest. Manulife applies 24%, which raises the 9.30% cap to an effective maximum of 11.53%.
Effective maximum credited rate in a strong market year
Manulife Bermuda — S&P account
11.53%
9.30% cap × 1.24 multiplier
Sun Life — comparable account
10.80%
A 10.80% cap, with no multiplier applied
1 The 0% floor protects credited interest from negative index returns. Policy charges, including the cost of insurance, are deducted separately and continue to apply.
Access to capital while you live.
A policy loan lets you borrow against your policy's cash value without surrendering the policy and, in most jurisdictions, without triggering a taxable event. The policy stays in force, the death benefit continues less any outstanding balance, and the insurer holds the cash value as security.
No credit process
There is no credit check, no affordability test and no fixed repayment schedule. You may repay at any time or let the interest roll up. The loan does not appear on a credit file.
Two ways to borrow
Both Manulife and Sun Life IUL policies offer the same two structures. The declared rates come from each insurer's illustration; the figures below are illustrative.²
Fixed loan
The amount borrowed is set aside in a collateral account earning a guaranteed rate, for example 4.75%, while the loan is charged at, for example, 6.00%. The 1.25% difference is your known, capped cost of borrowing. The rest of the cash value keeps earning index credits.
Participating loan
Nothing is moved out. The full cash value stays invested in the index while the loan runs alongside it at, for example, 6.00%. If the index credits more than the loan costs, you are ahead. If it credits nothing that year, the interest is a pure cost with no offset.
Worked example · US$100,000 loan drawn in year 1
| Position | Fixed loan | Participating loan |
|---|---|---|
| 8% index credit | ||
| Gross interest at 6.00% | -$6,000 | -$6,000 |
| Interest credited | +$4,750 (collateral 4.75%) | +$8,000 (index 8%) |
| Net position, Year 1 | -$1,250 | +$2,000 |
| In a 0% index year | -$1,250 (unchanged) | -$6,000 (no offset) |
Illustrative only. The fixed loan gives a known cost in every market. The participating loan can do better in strong years and worse in flat years. The right choice follows the purpose of the money and the way the policy is funded, not the headline number. 2 Rates shown are illustrative and not specific to either insurer; actual declared loan and crediting rates, and any caps on rate changes, are set out in each insurer's policy illustration.
What buyers actually do with it
This is not theoretical.
Capital for Life's IUL Buyer Survey 2026, of 1,800 verified high net worth enquiries, found that buyers treat the loan facility as a working feature of the policy rather than an afterthought.
70%
More than seven in ten buyers intend to use the loan facility actively during their lifetime, rather than hold the policy as passive cover.
Stated purpose of the borrowing
28%
Retirement income
Drawing on the policy to supplement income in later life
26%
Business opportunities
Property, private equity and working capital
19%
General liquidity
Policy loans drawn as and when capital is needed
What this means in practice
If the loan facility is going to be used, the funding pattern and the choice between fixed and participating borrowing matter from day one — the policy has to be designed for withdrawal, not only for cover.
Source: Capital for Life IUL Buyer Survey 2026, based on 1,800 verified HNW enquiries.
Borrowing from the policy, not the portfolio
The two are not equivalent.
For a client with discretionary-managed portfolios, the obvious alternative to a policy loan is a Lombard facility secured on those portfolios. The policy loan is a contractual right secured on floor-protected cash value, so it does not put your invested assets at risk of a market-driven margin call.
| IUL policy loan · Manulife / Sun Life | Lombard facility · secured on the DFM portfolio | |
|---|---|---|
| Nature of the facility | A contractual right written into the policy. The insurer cannot withdraw it for the life of the policy. | Typically a one to two year revolving facility, renewable at the bank's discretion and re-termed at each review. |
| In a falling market | Cash value carries a 0% floor and does not fall on negative index performance, so there is no market-driven margin call. | The portfolio is marked to market. A fall can breach the loan-to-value limit and prompt a demand for cash or a forced sale of holdings. |
| Recourse | Ring-fenced to the policy. The worst case is that the policy lapses, with no recourse to your other assets. | Typically full recourse, so a shortfall after a forced sale can be pursued. |
| Effect on the DFM mandate | Leaves the discretionary mandate completely untouched. | A pledge can impose eligibility and concentration limits that constrain what the manager can hold or trade. |
| Pricing and the relationship | Terms are set by contract and do not depend on assets held elsewhere. | Often relationship-priced. The rate and the limit can be linked to the assets held with the bank, and the bank may ask for more assets to maintain the facility or improve the rate. |
| Cost of borrowing | Known mechanics: the fixed loan locks a capped net spread of 1.25% a year; the participating route keeps the full balance exposed to S&P 500 crediting. | Variable, typically linked to base rates and repriced at renewal. |
| Qualification and footprint | No credit check and no income verification; the cash value is the security. Private, with no entry on a credit file. | The portfolio is pledged as collateral, subject to the bank's credit process, and forms part of the banking relationship. |
| Repayment | No fixed schedule. Repay when you choose or let interest capitalise. | Interest serviced on the facility; principal repaid or rolled at renewal, subject to terms. |
| On death | The outstanding balance is netted from the death benefit automatically. | The debt must be settled from the estate, which can force a sale of assets. |
An IUL policy loan still needs to be funded and reviewed over time, and a Lombard facility can be competitive on headline rate. The advantages above are structural and depend on the specific facility terms, which vary.
Ten years, through the policy.
Applying each insurer's current floor, cap and multiplier to the S&P 500's actual calendar-year price returns shows how the two structures would have behaved from 2015 to 2024. Manulife applies a 0% floor, a 9.30% cap and a 24% multiplier; Sun Life a 0% floor and a 10.80% cap, with no multiplier.³
| Year | S&P 500 price return* | Manulife credited · floor 0% · max 11.53% | Sun Life credited · floor 0% · cap 10.80% |
|---|---|---|---|
| 2015 | -0.7% | 0.00%Floor protected | 0.00%Floor protected |
| 2016 | +9.5% | 11.53%Cap reached | 9.50%Below cap |
| 2017 | +19.4% | 11.53%Cap reached | 10.80%Cap reached |
| 2018 | -6.2% | 0.00%Floor protected | 0.00%Floor protected |
| 2019 | +28.9% | 11.53%Cap reached | 10.80%Cap reached |
| 2020 | +16.3% | 11.53%Cap reached | 10.80%Cap reached |
| 2021 | +26.9% | 11.53%Cap reached | 10.80%Cap reached |
| 2022 | -19.4% | 0.00%Floor protected | 0.00%Floor protected |
| 2023 | +24.2% | 11.53%Cap reached | 10.80%Cap reached |
| 2024 | +23.3% | 11.53%Cap reached | 10.80%Cap reached |
3
Negative years, both policies protected by the 0% floor
0
Years either policy credited below zero
≈8.07%
Manulife average credited rate over the decade
≈7.43%
Sun Life average credited rate over the decade
3 *S&P 500 calendar-year price returns, excluding dividends, shown to one decimal place. Hypothetical illustration applying each insurer's current rates to past returns, the same basis Manulife uses for its own long-term study: Manulife a 0% floor, 9.30% cap and 24% multiplier, giving an 11.53% effective maximum; Sun Life a 0% floor, 10.80% cap and no multiplier, at 100% participation. The only year the two differ is 2016, when the index rose about 9.5%, just below Sun Life's cap. Caps, multipliers and participation rates are declared and may change. Past performance is not a guarantee of future results.
Carlton Crabbe
Founder & CEO
- 30
- Years specialist
- 6
- Continents advised
Previously in regulated roles at Barclays Private Bank and Grant Thornton.
About Carlton Crabbe and Capital for Life
Close to thirty years of specialist experience.
An international life insurance advisory specialising in Indexed Universal Life and Private Placement Life Insurance for high net worth and ultra high net worth families, entrepreneurs and their advisers. He designs cross-border IUL and PPLI structures for protection, liquidity and global estate planning across the UAE, UK, Europe, Africa, Asia and Australia.
Clients
(U)HNW and corporate clients from Google, Red Bull, BlackRock, L'Oréal, private equity executives, the UK government, hedge fund managers, billionaires, and pop and sports stars.
Works alongside
Financial advisers, tax specialists, trustees, private bankers, fiduciaries and family offices.
- High-value IUL & PPLI
- Multi-pay structures
- Premium finance
- Policy loans
- Trust-based planning
Understand the client. Analyse the structure. Build a solution that endures.
Indexed Universal Life, explained
Download the full briefing, prepared by Carlton Crabbe for Capital for Life.
