Why equity-indexed life insurance?

Honestly I don't know. why not use variable universal life insurance?
Equity-indexed life insurance (EIUL) is still relatively new comparing to universal life (UL) and variable universal life (VUL).

The key characteristics of an EIUL policy is that the interests earned in your life insurance policy is based on a stock market index.
I am a big fan of buying index fund and index ETF in my individual brokerage account. The decision was a little easier when choosing index (sometimes called passively) v.s. actively managed fund (ETF).

But EIUL is different. Most of them have caps. A recent illustration from Aviva was showing a 12% cap. And an illustration from Old Mutual life was showing a 15% cap. (I will talk about those illustrations in detail in later posts). One of the advantages was mentioned in "missed fortune", which the sales agent will most likely to emphasize on is that EIUL has a minimum cap as well. What that means it will give those guarantees even if the index has negative returns during the year.

So at the first glance, you will think EIUL is almost perfect. Although it limits the full potential of the indexing but it gives your guarantees.

Is it perfect? I doubt. I wish I have data to back me up on this (I am hoping I can illustrate using real numbers later on). But I am afraid the cap is the very reason you will not have your cash value accumulated as much as it can. What that means is that you might still be better off using the old "BTID" (buy term and invest the difference) way.
I know I needed more analysis.