IULs: The Financial Tool Everyone Wants—but 99% Get Wrong
Let’s have a real conversation about Indexed Universal Life insurance, or as most people call it, IULs.
You’ve probably heard people talk about how IULs offer tax-free retirement income, protection from market downturns, and lifelong coverage. And that’s all true but only if the policy is built the right way.
Here’s the issue:
Most IULs are set up completely wrong.
And I’m not saying that to scare you I’m saying it because I’ve seen it firsthand, over and over again. In fact, I’d say 99% of people who get an IUL either go with the wrong provider or work with someone who doesn’t know how to structure it properly. And that’s a real shame, because when done right, an IUL is one of the most powerful financial tools you can own.
So let’s break it down.
What Even Is an IUL?
At its core, an IUL is a type of permanent life insurance policy that comes with a cash value component. That cash value earns interest based on how a stock market index (like the S&P 500) performs but your money isn’t actually invested in the market.
Here’s the best part:
When the market goes up, your policy’s cash value can grow (up to a cap). When the market goes down, you don’t lose your growth just sits at a floor, usually 0% or 1%. That means you get upside potential with downside protection.
But that’s just the beginning.
Why People Love IULs (When They're Done Right)
Tax-Free Retirement Income
You can borrow from your policy’s cash value tax-free in retirement through policy loans. It’s like having your own personal bank that doesn’t send you a 1099.
No Contribution Limits
Unlike a Roth IRA or 401(k), you can fund an IUL well beyond government-set caps especially if you're behind on retirement and trying to catch up fast.
Market-Linked Growth Without Market Risk
With index crediting, your gains are tied to market performance without the risk of losing money during downturns.
Living Benefits
Many IULs come with features like critical illness or chronic illness riders, which means you can access your policy early if life throws you a curveball.
Wealth Transfer + Estate Planning
Because it's life insurance, your death benefit passes tax-free to your beneficiaries, making it a great tool for legacy planning.
Now Here’s Where It Goes Wrong
So, if IULs have all these amazing features, why do so many people end up disappointed?
It’s all in the structure.
A properly built IUL prioritizes cash value accumulation, not just the death benefit. But many agents whether out of lack of training or chasing commissions design policies with higher death benefits than needed. That increases the cost of insurance and leaves less money to grow.
Worse, some carriers charge excessive internal fees, offer low caps on growth, or lack strong index options.
That’s why two people can buy an IUL on the same day, put in the same amount of money, and end up with completely different results 10 years down the road.
What a Well-Structured IUL Looks Like
Here’s what you want to see:
Overfunded Policy: More money goes toward the cash value, less toward the cost of insurance.
Lower Death Benefit: Keeps costs down and helps your cash value grow faster.
Top-Tier Carrier: Choose a company with strong cap rates, multiple index strategies, and a solid reputation.
Designed for Growth: Built around your retirement goals, not just insurance coverage.
In short, you want an IUL that’s customized, not cookie-cutter.
Final Thoughts: You Deserve Better Than a “One-Size-Fits-All” Policy
An IUL isn’t just life insurance. It’s a strategy a tool to grow your money safely, access it tax-free, and protect your family at the same time.
But like any tool, it’s only as good as the person building it.
Before you lock into a policy, take the time to understand the structure. Ask the tough questions. Work with someone who takes the time to educate you not just sell to you.
If you're thinking about adding an IUL to your financial plan or wondering if your current one is built right let’s have a real conversation.
You deserve to see what a properly built IUL can actually do.