Indexed Universal Life
Indexed universal life, structured for high-income earners.
A specialty practice for buyers researching IUL as a tax-advantaged retirement, wealth-transfer, or business-continuity vehicle. We engage the strongest critics in public. We structure premium-financed cases conservatively. We do not service brokers.
The short version
Indexed universal life is a permanent life-insurance contract whose cash value credits interest tied (with caps, participation rates, and a floor) to an equity index, typically the S&P 500. Under IRC §7702 / §7702A, a properly structured, max-funded IUL accumulates cash value on a tax-deferred basis and can deliver tax-free retirement income via policy loans. In 2024, IUL set a sales record: $3.8 billion of new premium and roughly 24% of the US individual life-insurance market (LIMRA, 2025). After the NAIC's AG 49-A (2020) and AG 49-B (May 2023), illustration math is materially more conservative than the 8%-back-tested era critics often reference. The December 2020 §7702 interest-rate floor change (4% → 2%) further widened the funding band before MEC triggers, one of the reasons max-funded IUL is more compelling in 2024–2026 than in the prior decade.
Honest about IUL today
What changed, and what we’ll concede before you ask.
Illustrations were a problem. AG 49-A and AG 49-B fixed most of it.
Pre-2020 IUL illustrations routinely projected 8%+ on back-tested assumptions and added multipliers and bonuses on top. AG 49-A (2020) banned the enhanced-vs-non-enhanced disparity; AG 49-B (May 2023) capped the maximum illustrated rate at 145% of the carrier’s net hedge budget and forced bonuses to be reflected in the headline rate. We illustrate under current AG 49-A/B discipline and recommend Veralytic-grade third-party analysis on every policy, the framework Michael Kitces has advocated for over a decade.
Premium financing is in a litigation wave.
The 2022+ rate hikes turned cheap-leverage premium-financed IUL programs into catastrophic collateral-call risk. ThinkAdvisor has tracked roughly 200 individual suits and 50 class actions, including the high-profile Kyle Busch v. Pacific Life case (~$8.6M). We still structure premium-financed cases, but only where rate stress-testing, collateral, and exit plan all withstand worst-case scenarios.
§7702 changed in December 2020, and it matters.
The Consolidated Appropriations Act of 2021 lowered the §7702 interest-rate floor from 4% to 2%. The mechanical effect: substantially more premium can be paid into the same death benefit before MEC triggers under §7702A. This is the structural reason max-funded IUL is materially more attractive in 2024–2026 than in the prior decade. Most older critiques predate this change.
IUL is one bucket, not the whole portfolio.
Wade Pfau's research treats cash-value life insurance as a volatility-buffer / tax-diversification bucket inside an integrated retirement plan, not a standalone vehicle. We structure IUL the same way. If your tax-deferred accounts, taxable brokerage, and Roth conversions are already optimized, IUL fills a different bucket. If they aren't, fix those first.
Strategies
Eight structures we build with IUL.
IUL is the chassis. The strategy is the structure built on top of it. Each page below explains who it fits, the mechanics, the tax treatment, the honest downside, and an illustration under AG 49-A.
Premium-financed IUL
Borrow at institutional rates to fund a max-funded IUL. We structure these cases conservatively, with rate stress-testing and a clear exit plan, premium financing is currently in a litigation wave following the 2022+ rate increases, and only certain client profiles withstand worst-case scenarios.
Max-funded IUL
Fund the policy to the MEC ceiling under IRC §7702A, maximum tax-advantaged cash value, minimum death benefit. The core accumulation play, made more attractive by the 2020 §7702 interest-rate floor change.
Life insurance retirement plan (LIRP)
Use a max-funded IUL as a supplemental, tax-diversified retirement bucket. Tax-free policy loans under §72 fund retirement spending without taxable distributions. We treat IUL as one bucket in an integrated plan, never the only bucket.
Infinite banking concept
Use a high-cash-value policy as a personal banking system, borrow against cash value for capital purchases, repay the policy on your terms. We disclose the honest tradeoffs: the loan-wash math gets oversold.
§162 executive bonus plan
Owner-funded executive comp via bonus-paid life insurance premiums. Tax-deductible to the business under IRC §162; treated as wages to the executive. Often the cleanest key-employee retention vehicle.
Split-dollar life insurance
Premium-sharing arrangement between employer and key employee, or between related parties. Loan-regime or economic-benefit regime depending on structure and the Treasury Regs interpretation that fits.
Key-person insurance
Business-owned policy on a key executive or founder. Funds business continuity, debt protection, and recruitment in the event of an unexpected loss.
Buy-sell agreement funding
Cross-purchase, redemption, or wait-and-see structures funded by life insurance. Ensures business continuity and orderly equity transfer at owner death or disability.
Head-to-heads
How IUL stacks up against the alternatives.
Tax math worked at multiple income brackets. Honest verdict in every comparison, when IUL wins, when the alternative wins, when neither is right.
Critics, fact-checked
We engage the strongest IUL critics. With math.
IUL has the loudest critics in personal finance. Most counterarguments are weak or unsourced. Each piece below acknowledges where the critic is partially or fully right, and engages the rest with citations.
Schedule a 45-minute IUL strategy call.
Pre-call intake captures income, liquid net worth, profession, and current planning. Conversation is structured around your situation, not a sales pitch.
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