Annual Step-Up in the context of an IUL policy, refers to a feature where the policy's credited interest rate is locked in, and the account value is reset at the end of each policy year. This means any gains achieved from the linked index during the year are "stepped up" and become a guaranteed part of the policy's cash value.
Annual Step-Up in the context of an IUL policy, refers to a feature where the policy's credited interest rate is locked in, and the account value is reset at the end of each policy year. This means any gains achieved from the linked index during the year are "stepped up" and become a guaranteed part of the policy's cash value.
Once these gains are locked in, they are protected from future market downturns. In subsequent years, interest credits are based on this new, higher account value, allowing policyholders to benefit from the compounding effect of previous years' positive index performances without the risk of losing those gains in a future downturn.
Note: The Annual Step-Up feature underscores one of the primary advantages of IUL policies: the potential for cash value growth tied to market performance with protection against losses.
Annual Step-Up in the context of an IUL policy, refers to a feature where the policy's credited interest rate is locked in, and the account value is reset at the end of each policy year. This means any gains achieved from the linked index during the year are "stepped up" and become a guaranteed part of the policy's cash value.
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