Which feature is unique to indexed universal life insurance policies?

Indexed universal life insurance policies are distinct in that their cash value growth is directly linked to the performance of a specific stock market index, such as the S&P 500. This unique feature allows policyholders to potentially benefit from the upward movement of the stock market while also providing a level of protection against market losses, typically through a floor that prevents the cash value from decreasing. This linkage to a stock market index allows for more dynamic growth potential compared to traditional whole life policies, which generally offer fixed interest rates, or universal life policies, where cash value growth is dependent on a crediting interest rate set by the insurer.

In contrast to this unique characteristic, other features associated with life insurance policies do not apply specifically to indexed universal life insurance. For example, linking cash value growth to bond market performance would not represent the indexed nature of this type of policy. Fixed premiums apply to certain traditional life insurance policies, but indexed universal life may allow for flexible premium payments. Lastly, while many life insurance policies offer guaranteed death benefits, not all indexed universal life policies guarantee that death benefit regardless of cash value, as some may vary based on policy performance. Thus, the aspect of linking growth to a stock market index is what sets indexed universal life insurance apart.