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The Risk Tolerance Approach
Conservative
Growth
Moderate
Next Steps
Let’s explore 3 types of policies from a tradeoff perspective.
A well-rounded financial strategy should include life insurance. And, in many cases it can provide supplemental uses that can help in their retirement and broader financial picture.
This unique graphic from Franklin Templeton shows the S&P 500® returns going back nearly 85 years. It can help visualize how certain policies would have either gained or lost in particular years.
Knowing a client’s approach to market gains and losses can help narrow down which life insurance products might be most appropriate for them.
Explore types of policies from a risk tolerance perspective. Let’s see how a client might have benefited or sacrificed growth potential, based on a particular type of policy during these years.
High inflation, uncertain markets, and the high cost of health care expenses all factor into the need for a new approach to clients’ long-term plans.
Source: Franklin Templeton. Each calendar year listed in chart reflects average annual performance from December 31 of prior year to December 31 of listed year. Returns prior to 1957 are representative of the S&P 90 Index, a value-weighted index based on 90 stocks. Performance shown reflects the effects of dividend reinvestment. This chart is for illustrative purposes only and does not represent actual performance, past or future, of any investment. Past performance is no guarantee of future results. Clients should consider the investment objectives, risks, and charges and expenses carefully before investing in the contract and/or underlying portfolios. The initial summary prospectus for the contract, the prospectus for the index strategies, and the prospectus or summary prospectus for the underlying portfolios (collectively, the “prospectuses”) contain this information as well as other important information and may be obtained by contacting your Prudential Life Wholesaler or from prudential.com. Clients should read the prospectuses carefully before investing. Life insurance is issued by Pruco Life Insurance Company (except in NY), and Pruco Life Insurance Company of New Jersey (in NY). Variable products are offered through Pruco Securities, LLC (member SIPC). All are Prudential Financial companies located in Newark, NJ. This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any clients or prospective clients. The information is not intended as investment advice and is not a recommendation about managing or investing a client’s retirement savings. Clients seeking information regarding their particular investment needs should contact a financial professional. We do not provide tax, accounting, or legal advice. Clients should consult their own independent advisors as to any tax, accounting, or legal statements made herein. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of Pruco Life Insurance Company and do not apply to the underlying investment options. Policy guarantees and benefits are not backed by the broker-dealer and/or insurance agency selling the policy, nor by any of their affiliates, and none of them makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company.This information is hypothetical and not representative of any particular product. Past performance does not guarantee future results. Buffers available on index-crediting strategies only. Variable investment options are available but do not offer protection levels. The S&P 500 Index is a product of S&P Dow Jones Indices LLC ("SPDJI"), and has been licensed for use by Pruco Life Insurance Company. Standard & Poor's, S&P and S&P 500 are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Pruco Life Insurance Company. Pruco Life Insurance Company's product(s) are not sponsored, endorsed, sold, or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index. It is not possible to invest directly in an index. © 2024 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONALS. NOT FOR USE WITH CONSUMERS. 1066459 -00003-00 Ed. 06/2024 ISG_DG_ILI476_01
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CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONALS. NOT FOR USE WITH CONSUMERS.
Source: Franklin Templeton. Each calendar year listed in chart reflects average annual performance from December 31 of prior year to December 31 of listed year. Returns prior to 1957 are representative of the S&P 90 Index, a value-weighted index based on 90 stocks. Performance shown reflects the effects of dividend reinvestment. This chart is for illustrative purposes only and does not represent actual performance, past or future, of any investment. Past performance is no guarantee of future results. Clients should consider the investment objectives, risks, and charges, and expenses carefully before investing in the contract and/or underlying portfolios. The initial summary prospectus for the contract, the prospectus for the index strategies, and the prospectus or summary prospectus for the underlying portfolios (collectively, the “prospectuses”) contain this information as well as other important information and may be obtained by contacting your Prudential Life Wholesaler or from prudential.com. Clients should read the prospectuses carefully before investing. Life Insurance is issued by Pruco Life Insurance Company (except in NY), and Pruco Life Insurance Company of New Jersey (in NY). Variable products are offered through Pruco Securities, LLC (member SIPC). All are Prudential Financial companies located in Newark, NJ. This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any clients or prospective clients. The information is not intended as investment advice and is not a recommendation about managing or investing a client’s retirement savings. Clients seeking information regarding their particular investment needs should contact a financial professional. We do not provide tax, accounting, or legal advice. Clients should consult their own independent advisors as to any tax, accounting, or legal statements made herein. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of Pruco Life Insurance Company and do not apply to the underlying investment options. Policy guarantees and benefits are not backed by the broker-dealer and/or insurance agency selling the policy, nor by any of their affiliates, and none of them makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company.This information is hypothetical and not representative of any particular product. Past performance does not guarantee future results. Buffers available on index-crediting strategies only. Variable investment options are available but do not offer protection levels. The S&P 500® Index is a product of S&P Dow Jones Indices LLC ("SPDJI"), and has been licensed for use by Pruco Life Insurance Company. Standard & Poor's®, S&P®, and S&P 500® are registered trademarks of Standard & Poor's Financial Services LLC ("S&P")®; Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Pruco Life Insurance Company. Pruco Life Insurance Company's product(s) are not sponsored, endorsed, sold, or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index. It is not possible to invest directly in an index. © 2025 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONALS. NOT FOR USE WITH CONSUMERS. 1066459-00005-00 Ed. 05/2025 ISG_DG_ILI517_01
The benefit
The tradeoff
For these individuals, an Indexed Universal Life (IUL) policy may be a consideration.
IUL policies give up some of the upside potential so a client can rest easy with no market-based losses.
Hypothetically, let’s assume a 0% floor and a 12% cap. Cap ranges vary on IUL products. The industry cap rate average over the last 5 years has been 9% – 10%.
This information is hypothetical and not representative of any particular product. Past performance does not guarantee future results.
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10 years up - 0 to 6%: 1947 to 48, 1960, 1970, 1987, 1994, 2005, 2007, 2011 & 2015. 9 years up - 6.01 to 12%: 1956, 1959, 1968, 1978, 1984, 1992 to 93, 2004 & 2016. Clients would have had full participation in these 19 years.
Clients would have had full participation in these 19 years.
chart shows specific years between 1939 & 2022 where losses would not have occurred by having had a 0% floor - in categories 1, 3, 5 & 10 years down. During these years, a loss would not have occurred by having had a 0% floor.
During these years, a loss would not have occurred by having had a 0% floor.
Clients would have been protected from any amount of market loss because of a 0% floor. And, they would have fully participated in gains up to the cap; 12% in this example.
Chart highlights various years within categories 8 years up, 12.01-18%; 17 years up, 18.01-24% and 21 years up, 24.01% plus. In these years, only the first 12% of gains would have been realized. Market participation was restricted to the amount of the cap.
In these years, only the first 12% of gains would have been realized. Market participation was restricted to the amount of the cap.
10 years up: 0 to 6%: 1947 to 48, 1960, 1970, 1987, 1994, 2005, 2007, 2011 & 2015. 9 years up: 6.01 to 12%: 1956, 1959, 1968, 1978, 1984, 1992 to 93, 2004 & 2016. These are the only years where growth would not have been limited by a cap.
These are the only years where growth would not have been limited by a cap.
The tradeoff is their indirect limited upside exposure. The limit would have caused them to forgo the robust return years above the cap.
10 years up - 0 to 6%: 1947 to 48, 1960, 1970, 1987, 1994, 2005, 2007, 2011 & 2015. 9 years up - 6.01 to 12%: 1956, 1959, 1968, 1978, 1984, 1992 to 93, 2004 & 2016.
chart shows specific years between 1939 & 2022 where losses would not have occurred by having had a 0% floor - in categories 1, 3, 5 & 10 years down.
Chart highlights various years within categories 8 years up, 12.01-18%; 17 years up, 18.01-24% and 21 years up, 24.01% plus
10 years up: 0 to 6%: 1947 to 48, 1960, 1970, 1987, 1994, 2005, 2007, 2011 & 2015. 9 years up: 6.01 to 12%: 1956, 1959, 1968, 1978, 1984, 1992 to 93, 2004 & 2016.
average annual return for the S&P 500® 1937 – 2024
For these individuals, a Variable Universal Life (VUL) policy may be a consideration.
10.7%
VUL policies give potential for a client with the risk tolerance and behavior type to ride out the down years to participate in the up years. The S&P 500® has historically been positive roughly 76% of the time. This is one reason why some financial professionals and clients are interested in solutions like VUL that can provide full upside participation.
65 positive years in 10 years up, 0-6%; and 19.7% average positive return in various years in categories 8 years up, 12.01-18%, 17 years up, 18.01-24% and 21 years up, 24.01% plus
average positive return
19.9%
positive years
67
Clients would have unlimited upside exposure to equities.
2 years down
chart shows 21 negative years in 1 and 3 years down categories; and -12.5% average negative returns in 1, 5 & 10 years down categories.
average negative return
-12.5%
negative years
21
The tradeoff is that clients would have participated in all of the down years.
average annual return for the S&P 500 1937 – 2023
10.5%
66
19.7%
VUL policies give potential for a client with the risk tolerance and behavior type to ride out the down years to participate in the up years. The S&P 500 has historically been positive roughly 76% of the time. This is one reason why some financial professionals and clients are interested in solutions like VUL that can provide full upside participation.
For these individuals, a new category of policy might be a consideration … Indexed Variable Universal Life (IVUL). These types of policies offer a buffer to limit some of the downside in exchange for various ways to participate in a meaningful amount of market gains. They can have flexibility to allow clients to embrace varying levels of moderate-minded market approaches; from moderate/conservative — to moderate/growth-minded approaches.
IVUL policies allow the client to absorb some of the downside risk but give greater upside potential than IUL. In exchange for this amount of risk-sharing, the upside potential lands somewhere between IUL and VUL as well. You’ll find that IVUL can be an extremely attractive value proposition that wasn’t readily available to the life insurance space until recently.
Hypothetically, let's assume a 10% buffer.
Source: Franklin Templeton. Each calendar year listed in chart reflects average annual performance from December 31 of prior year to December 31 of listed year. Returns prior to 1957 are representative of the S&P 90 Index, a value-weighted index based on 90 stocks. Performance shown reflects the effects of dividend reinvestment. This chart is for illustrative purposes only and does not represent actual performance, past or future, of any investment. Past performance is no guarantee of future results. Clients should consider the investment objectives, risks, and charges and expenses carefully before investing in the contract and/or underlying portfolios. The initial summary prospectus for the contract, the prospectus for the index strategies, and the prospectus or summary prospectus for the underlying portfolios (collectively, the “prospectuses”) contain this information as well as other important information and may be obtained by contacting your Prudential Life Wholesaler or from prudential.com. Clients should read the prospectuses carefully before investing. Life insurance is issued by Pruco Life Insurance Company (except in NY), and Pruco Life Insurance Company of New Jersey (in NY). Variable products are offered through Pruco Securities, LLC (member SIPC). All are Prudential Financial companies located in Newark, NJ. This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any clients or prospective clients. The information is not intended as investment advice and is not a recommendation about managing or investing a client’s retirement savings. Clients seeking information regarding their particular investment needs should contact a financial professional. We do not provide tax, accounting, or legal advice. Clients should consult their own independent advisors as to any tax, accounting, or legal statements made herein. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of Pruco Life Insurance Company and do not apply to the underlying investment options. Policy guarantees and benefits are not backed by the broker-dealer and/or insurance agency selling the policy, nor by any of their affiliates, and none of them makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company.This information is hypothetical and not representative of any particular product. Past performance does not guarantee future results. Buffers available on index-crediting strategies only. Variable investment options are available but do not offer protection levels. The S&P 500 Index is a product of S&P Dow Jones Indices LLC ("SPDJI"), and has been licensed for use by Pruco Life Insurance Company. Standard & Poor's, S&P and S&P 500 are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Pruco Life Insurance Company. Pruco Life Insurance Company's product(s) are not sponsored, endorsed, sold, or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index. It is not possible to invest directly in an index. © 2025 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONALS. NOT FOR USE WITH CONSUMERS. 1066459 -00004-00 Ed. 05/2025 ISG_DG_ILI517_01
10 years up, 0-6%; and 19.7% average positive return in various years in categories 8 years up, 12.01-18%, 17 years up, 18.01-24% and 21 years up, 24.01% plus. Clients would have unlocked more years of full participation than our conservative client in the IUL example. These clients also would have had an opportunity to capture a greater amount of market returns.
Clients would have unlocked more years of full participation than our conservative client in the IUL example. These clients also would have had an opportunity to capture a greater amount of market returns.
chart shows specific years between 1939 & 2022 where clients would have limited their loss over 50% of the time markets were down - in categories 1, 3, 5 & 10 years down. By accepting a buffer, 10% in this example, clients would have limited their loss over 50% of the time markets were down. They would have gotten the protection from some loss, as opposed to our growth-oriented client in the VUL example, where that client would have had full downside exposure.
By accepting a buffer, 10% in this example, clients would have limited their loss over 50% of the time markets were down. They would have gotten the protection from some loss, as opposed to our growth-oriented client in the VUL example, where that client would have had full downside exposure.
Clients would have had indirect upside exposure to equities and downside protection from losses by limiting the amount of loss they would have been exposed to. This is referred to as a buffer. Clients would have participated in any loss beyond that.
10 years up, 0-6%; and 19.7% average positive return in various years in categories 8 years up, 12.01-18%, 17 years up, 18.01-24% and 21 years up, 24.01% plus. The client would not always have had full participation in the upside of the equity markets. Upside potential in this example is less than our growth example (VUL) but more than our conservative example (IUL).
Upside potential in this example is less than our growth example (VUL) but more than our conservative example (IUL).
The client would not always have had full participation in the upside of the equity markets.
chart shows specific years between 1939 & 2022 where markets went up 75% of the time, but still went down in other years - in categories 1, 3, 5 & 10 years down. While markets went up 75% of the time, they did still go down, sometimes meaningfully.
While markets went up 75% of the time, they did still go down, sometimes meaningfully.
The tradeoff is that clients would have had participated in the downside beyond the 10% buffer. And, by accepting the buffer, they would have limited some of their upside potential.
10 years up, 0-6%; and 19.7% average positive return in various years in categories 8 years up, 12.01-18%, 17 years up, 18.01-24% and 21 years up, 24.01% plus
chart shows specific years between 1939 & 2022 where clients would have limited their loss over 50% of the time markets were down - in categories 1, 3, 5 & 10 years down.
chart shows specific years between 1939 & 2022 where markets went up 75% of the time, but still went down in other years - in categories 1, 3, 5 & 10 years down.
Explore these three categories of life insurance in more depth. They can be a fitting answer to a client’s long-term needs.
Who's Your Rock?
Indexed Universal Life
Variable Universal Life Insurance
Indexed Variable Universal Life Insurance
Talk to clients about the potential fit of market-linked life insurance in their financial strategy.
