Open an IUL statement and you'll often find crediting options that aren't a familiar index. Names with a bank in them, or the word controlled, or a number like 5 or 8 sitting on the end.
That number is usually the volatility target. The index holds a mix of assets. When measured volatility rises above the target it shifts toward cash, then back into the riskier assets once things settle. The point is to keep the index's swing size near a fixed level.
The reason carriers offer them is cost. A steadier index is cheaper to hedge. Options on a low-volatility index cost the carrier less. That lets them offer terms that look better on the page. No cap at all, or a participation rate above 100%, sometimes 140% or higher. An uncapped 140% participation rate reads like a much better deal than a 9% cap on the S&P 500.
The trade-off is that the index itself moves less. An index built for 5% volatility a year is designed not to produce the 20% years. So 140% of a small number can land under 100% of a bigger one. And when it shifts into cash during a rough stretch, you earn cash returns while the market climbs back. That climb is often exactly when the recovery happens.
Most of these indexes are also young. An index launched in 2018 with backtested history before that is showing you a model, not a record. Backtests get built with the benefit of knowing what happened. And the illustration rate that comes off them is regulated but still a projection rather than a promise.
If your policy offers both, split the allocation and watch two or three anniversaries before you commit. You'll learn more from your own credited rates over three real years than from any hypothetical on the illustration.