IUL index options: how S&P 500, volatility-controlled and multi-asset indices compare

The three types of index compared

An IUL index option is a reference index that the index account can select and that is used to calculate index interest. Based on the public pages of Singapore insurers reviewed for this site, they can be grouped into three types (the following describes types only and is not a product recommendation or ranking).

Sources: Great Eastern index page (as at 21 Nov 2025). Access to S&P DJI's index pages and methodology documents was restricted when this site rechecked them, so the mechanics described rely on the insurers' pages. In its press release of 20 Jul 2026, Prudential refers to indices with uncapped returns as volatility-controlled indices.

Among these, the S&P 500 is the most common benchmark in IUL. It is compiled by S&P Dow Jones Indices, covers large U.S. companies and has no volatility control. In an IUL it is usually used as a price index on a one-year point-to-point basis, with a cap rate and a 100% participation rate; Singlife's product page states that the calculation excludes dividends (5 Sep 2024). The U.S. AG 49-A likewise defines "S&P 500 price change, one-year point-to-point, cap, 100% participation rate, 0% floor" as the benchmark index account for illustrations (NAIC, 11 Dec 2025).

Volatility control: exposure as the accelerator

A volatility-target index does not simply hold shares. It forecasts future volatility and sets equity exposure at "target volatility ÷ forecast volatility", holding the remainder in cash equivalents. Exposure is reduced when forecast volatility is above target and increased when it is below; whether exposure may exceed 100% depends on the methodology of the particular index.

The above is illustrative and not the actual parameters of any index. The Great Eastern index page (as at 21 Nov 2025) says the S&P 500 Engle 6% VT TCA adjusts its exposure to S&P 500 index futures dynamically through a distinctive volatility-control method and controls volatility through intraday rebalancing. The two Engle 6% indices are compiled by S&P DJI and UBS respectively, in collaboration with Professor Robert Engle, using forward-looking volatility forecasting or rebalancing models. The 6% in the name is the target volatility, VT stands for volatility target and TCA for transaction cost adjustment; whether exposure can exceed 100% is for the index methodology document to say.

One easily overlooked point of logic: the index account of an IUL already has a floor (commonly 0%). In a year when the index falls, the crediting rate is the floor value whether the index is a price index or a volatility-controlled one, so "falling less in a crash" has no value for the index interest itself. What volatility control really changes is two things: the shape of the upside and the cost of options (see The option budget). The table below is a qualitative analysis of the mechanics and not a conclusion about the merits of any one index.

Excess return, price return and transaction cost adjustment

An excess return index measures the return above a cash benchmark rate: where exposure is obtained through futures, the index return is already net of the cash benchmark rate. In years when cash rates are positive, an excess return index is naturally lower than the corresponding total return, by roughly that year's cash rate, which is one reason it often looks a notch lower in public comparisons. TCA (transaction cost adjustment) means the index has been reduced by assumed transaction costs at each rebalancing. Price return, excess return and total return are different bases and cannot be compared directly side by side. To tell which basis an index uses, look at the suffix on the full index name or ticker (such as PR, ER or TR) and at the return-type entry in the index methodology. Insurers' pages often give only a short name for the index; in that case ask the insurer for the index's methodology document and check it against the product summary to confirm which version is used.

Multi-asset indices and the number of indices

A multi-asset index combines equities, Treasury futures, gold and other assets by risk weight and then overlays volatility control. The Great Eastern index page says UBS Multi Asset Engle 6% uses a forward-looking rebalancing model (21 Nov 2025). Target volatility is not uniform: in its press release of 26 Feb 2026, Singlife lists five indices, including the S&P 500, S&P 500 Engle 8% VT TCA, Nasdaq-100 Engle 8%, UBS Global Multi Asset Engle 8% and UBS Gold Engle 8%, which use an 8% target.

The number and types of options also differ. Prudential's product page says seven indices are offered, of which up to three can be selected, including a "decrement" index that, by its name, carries a fixed deduction of 0.50% a year (12 Oct 2026). HSBC Life says its index sub-account options have increased to six (9 Sep 2026). A decrement means part of the cost is built into the index, so it should be read together with the cap rate and participation rate when comparing.

Backtests versus live data: why to look at them separately

A backtest is a hypothetical calculation applying the index rules to historical data; all "history" before an index launches is backtest. Live data are the values actually calculated after the index is formally published. Taking the S&P 500 Engle 6% VT TCA as an example, S&P DJI discloses that the index went live on 7 Mar 2025 and that earlier data are hypothetical backtests (relayed in a Great Eastern brochure, which cites S&P Dow Jones Indices LLC as the source, as at 22 Jun 2026; access to the S&P DJI original was restricted when this site rechecked it, so the index provider's latest document prevails). The backtest period is far longer than the live period, and the rules may have been fixed after the historical data were seen, so a backtest cannot be treated as a return to expect.

For any backtest figure that appears in product materials, therefore, it is advisable to ask five questions: the start and end dates of the data, the live start date, whether the return basis is price, excess or total return, whether index-level fees have been deducted, and whether a cap or participation rate has been applied. This site quotes no annualised backtest figures.

Checklist when choosing an index

1. The index name, its provider and where the methodology document is published.
2. The return basis: price return, excess return or total return.
3. The live start date, and the share of backtest versus live data in the history shown.
4. The target volatility and exposure ceiling, and whether exposure above 100% is allowed.
5. Whether there is a "decrement" or fixed deduction, and whether rebalancing is intraday or end of day.
6. Current values and guaranteed minimums of the cap rate, participation rate and spread paired with the index; see Caps and participation rates.
7. The replacement rule in the contract if the index is discontinued or materially changed.
8. The index provider is not a party to the policy, and its disclaimer generally states that it gives no assurance as to policy outcomes; read the index disclaimer listed on the product page.

If you would like a product summary or benefit illustration interpreted in light of your own circumstances, you can register your needs through the contact details on this site.