Buckets

 Buckets are segments of premium dollars in an indexed universal life insurance (IUL) policy that are allocated to a particular index strategy for a specified period of time. An example of a typical index bucket is the placement of a portion of the premium on an indexed universal life insurance policy into an S&P strategy for one year. When measuring the performance of the bucket of funds, the benchmark may be the one-year point to point method. When a large sum of money is placed into a policy at one time, the insurance company might offer the opportunity to place the bulk of the premium dollars initially into the fixed account of the policy, and then gradually move the money each month into one or more index strategies over the coming year. This has the effect of dollar cost averaging, and each amount applied is known as a bucket. (Back to IUL Table of Contents)