General account

Every life insurer holds a general account: the assets it invests for its own account to meet the promises in its policies. An indexed universal life (IUL) policy is a general account product. The premium becomes part of the insurer's assets, and the policyholder holds a contractual claim on the insurer for the account value and the death benefit.

How it works in an IUL

• The floor. The 0% floor is an obligation of the insurer, met from the general account.
• The fixed account. The declared rate on the fixed account is paid from the general account's investment earnings.
• Index crediting. Insurers typically fund index credits by spending part of the general account's investment earnings on index options, a sum known as the hedge budget. The cap and participation rate are set to what that budget can buy.
• Policy loans. A policy loan is the insurer lending its own funds against the policy.

Each of these depends on the insurer, so its solvency and financial strength ratings matter for a contract that may run for 30 or 40 years.

In practice

• Where the money sits. IUL: in the insurer's general account. PPLI: in a segregated account linked to the structure.
• Legal title. IUL: the insurer owns the assets outright. PPLI: the insurer holds legal title and the policyholder keeps the beneficial interest.
• Investment risk. IUL: the insurer bears it and credits a formula-based return. PPLI: the policyholder bears it, and the value follows the portfolio.
• The policyholder's claim. IUL: against the insurer's general account. PPLI: against the assets of that segregated account.

In an international IUL

International IUL is issued to people living outside the United States, mainly by Bermuda and US insurers, and the account value, floor and death benefit are obligations of the issuing insurer whether an offshore trust, a company or an individual owns the policy. Capital for Life works with insurers with strong financial strength ratings, and the annual review includes a check on the insurer's rating.

In a PPLI structure

In a PPLI structure the premium goes into a segregated account, invested to an agreed strategy and ring-fenced from the insurer's general account and its general creditors. Bermuda's Segregated Accounts Companies Act 2000 defines the general account as all the assets and liabilities of a segregated accounts company that are not linked to a segregated account, and holds the assets linked to a segregated account as a separate fund, available only to meet that account's own liabilities. Fitch's insurer financial strength ratings leave out policyholder obligations in separate accounts or segregated funds where the policyholder bears the investment risk; commitments the insurer itself makes on them are still covered.

Common questions

Is IUL cash value held in the insurer's general account?

Yes. The account value records what the insurer owes the policyholder, and the general account backs it. The policyholder holds a life insurance contract, with no index fund or shares in their name.

What is the difference between a general account and a segregated account?

A general account holds the insurer's own assets, which back all its general obligations. A segregated account holds assets linked to a specific PPLI structure, kept apart from the general account by law, with the investment risk on the policyholder.

Go deeper: how IUL works and how a PPLI structure works.

Sources

• Bermuda Segregated Accounts Companies Act 2000
• NAIC Actuarial Guideline XLIX-A (US)
• Fitch Ratings: Rating Definitions

Last reviewed November 2026.