A Smarter Path Forward: The Power of Diversification in IUL

In an increasingly unpredictable market, the old playbook of chasing past performance just doesn’t cut it anymore. Indexed universal life insurance (IUL) has long been a powerful tool for both protection and accumulation potential, but it’s time we rethink how we use it. Allianz believes the future of IUL lies in diversification—and they’ve built their strategy around making that future accessible, understandable, and effective for both financial professionals and clients.

Diversification Isn’t Just a Buzzword—It’s a Long-Term Strategy

Diversification in the context of IUL doesn’t refer only to spreading assets across different types of financial vehicles within a portfolio. It’s about strategically allocating across multiple allocation options and bonus opportunities—so clients aren’t betting on a single choice. That can be important in any market environment, where economic shifts can throw even the most carefully crafted index off course. “Diversification in IUL is about more than just spreading allocations,” says Corey Luke, AVP, Head of Life Advanced Markets. “It’s about creating a policy strategy that’s built to weather different market environments—not just thrive in the perfect scenario.”

Allianz IUL products offer up to 16 allocation options—built from five indexes, three bonus structures, non-bonus options, multiple crediting methods, and a fixed account—allowing financial professionals to tailor strategies to fit each client’s comfort level with risk and long-term goals. Luke explains, “Financial professionals have the flexibility to build truly customized strategies that align with each client’s goals and risk tolerance.” Whether someone leans aggressive or conservative, the tools are there to construct a thoughtful, balanced approach. And the best part? You don’t have to sacrifice competitiveness to diversify.

Leveling the Playing Field: Competitive Illustrations with Built-In Balance

One of the key challenges in the industry has been that diversified strategies are a good talking point but they don’t always illustrate well. Many carriers struggle to promote diversified approaches if they lead to less competitive illustrated scenarios. Illustrated rates are set by a complex set of regulations taking into account product design, historical lookback information, and bonus availability. Due to inefficient design or a lack of options, it’s not uncommon for competitor IULs to have only one index bonus combination that illustrates best.

Allianz takes a different approach “We focus on a combination of customer value and choice when designing our products,” says Luke. “We’ve been driving index innovation for years and have many options with established historical data. Our diversified strategies maintain competitiveness so financial professionals don’t have to choose between showing a strong illustration and doing what may be appropriate for the client long-term.” It’s a major win for credibility and for clients who want a smoother experience, not a rollercoaster.

Lock In Gains, Lock Out Regret

Allianz also pioneered one of the most innovative product features in the IUL space: lockable indexes. Clients can manually lock in an index value (once during a policy year) or set automatic triggers that can potentially if an index value reaches a predefined threshold. It’s about giving clients more control without needing them to become market experts. “A client might see a 12% index value gain mid-year and wonder if they should hold or lock in,” Luke explained. “With lockable options, they don’t have to guess. They can act or set rules that act for them. It’s powerful, and it brings a sense of control and reassurance.”

Meet Ensight: The Future of IUL Illustrations

Of course, a strategy only works if it’s easy to understand. That’s where our partnership with Ensight, Allianz’s next-generation illustration system experience, comes in.

Ensight simplifies complex illustrations by making them visual, interactive, and intuitive. Financial professionals can show clients exactly how their policy is diversified, walk through “what-if” scenarios, and tailor recommendations based on risk profiles—without overwhelming them with charts and jargon. “Clients don’t want spreadsheets. They want clarity. Ensight lets us give them that.” shared Luke.

For financial professionals, it can mean fewer hours spent explaining why one index didn’t perform as expected. For clients, it can mean reassurance. They can see for themselves that their policy is designed to absorb change, not react to it.

The Real Win: Happier Clients, Stronger Relationships

When clients understand their policy and aren’t second-guessing potential results, it can build trust. Financial professionals aren’t stuck in the cycle of defending index choices year after year and are able to start focusing on what matters: helping clients stay on track.

Diversification can relieve the pressure of being “right” about market direction. It can turn a volatile experience into a smoother ride. Consistency—and results—over the longer term may be more important to the client than a single year of outsized performance.

Leading the Way—and Encouraging the Industry to Follow

Allianz was one of the first carriers to launch volatility-controlled indexes in IUL back in 2014. They have remained committed to innovation ever since—from developing lockable indexes to pushing the conversation around diversification forward.

“Allianz is not just innovating to stand out,” Luke says. “We’re innovating to push the industry forward. Our goal is to help financial professionals deliver better outcomes and build deeper trust with their clients.” That’s why Allianz is out in the field, presenting, training, and partnering with FMOs and financial professionals to make these ideas actionable.

The future of IUL isn’t just about chasing performance. It’s about building resilient products designed to stand the test of time and seek to deliver results in any market. Allianz hopes other carriers will follow their lead in telling the diversification story and find a way to make diversification part of their product strategy.

Diversifying within a policy does not ensure that it will be credited with interest in any given year.

Bonused products may include higher surrender charges, longer surrender periods, lower rates, or other restrictions that are not included in similar products that don’t offer a bonus.

Although an external market index may affect your interest credited, your policy does not directly participate in any stock or equity or bond investments. You are not buying shares in any stock or index.

Exercising an Index Lock may result in a credit higher or lower than if the Index Lock had not been exercised.

Guarantees are backed solely by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America.  

Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297.

This content does not apply in the state of New York.

Product and feature availability may vary by state and broker/dealer. 

For financial professional use only – not for use with the public.