An indexed UL cap is the maximum interest rate that an indexed universal life policy will credit for a given segment and strategy during the crediting period. If the reference index return exceeds the cap, credited interest is limited to the cap. Caps fluctuate at renewal based on option costs, interest rates, and insurer pricing. Cap level interacts with participation rates and spreads to shape outcomes; understanding renewal practices is essential for realistic policy management.

During reviews, advisors monitor cap changes and adjust strategies or funding as needed. They set expectations that caps move with option costs and rates, affecting potential credits year to year.