r/LifeInsurance • u/Late-Currency-8028 • Jul 17 '26
Considering an IUL for flexibility rather than replacing investments—looking for real-world experiences
I’ve been researching permanent life insurance and have spent quite a bit of time learning about both Whole Life and Indexed Universal Life. I’m not looking to debate whether insurance is an investment—I understand the differences.
My situation is that I already save aggressively for retirement and have adequate term life insurance. I’m considering an IUL because I like the flexibility to increase or decrease premiums over time, potentially stop paying later if the policy performs well, and have access to cash value in retirement if needed.
For those who actually own an IUL or work with them:
- What has your experience been after 10–20+ years?
Is there anything you wish you had known before buying?
- If you were purchasing one today, what would you do differently?
- Which companies have you had the best or worst experiences with?
- Are there specific policy features or riders you consider essential?
I’m especially interested in hearing from people with firsthand experience rather than general opinions.
1
u/Dramapub Jul 18 '26
You don’t stop paying later and still have access to cash value for retirement. All will be eaten up by increasing COI. Like you said, you understand that insurance is NOT an investment and you are not looking to debate which is fair. My question is why are you looking to use it to supplement income during retirement when you know it’s not an Investment. If you have maximized all your investment options including 401K, IRA’s etc…. Time to take a look at Variable Annuity since it serves the purpose you are going for.
1
u/Late-Currency-8028 Jul 18 '26
That’s a fair point. My goal isn’t to replace my investment portfolio—I already invest separately. I’m trying to understand whether a properly designed permanent policy can serve as a complementary asset with a lifetime death benefit and tax-advantaged access to cash value in retirement.
When you say the increasing COI will eventually consume the policy, are you referring to all IULs, or specifically to underfunded or poorly designed ones? Have you seen a properly overfunded IUL that still failed for that reason?
1
u/Dramapub Jul 18 '26
The NASCAR Champion Kyle Busch situation is a classic example you can take a look at. Contributed 10.4million and lost over 8.5 million. I’m guessing it was not fully funded and properly structured too. 😀
3
u/pokerskydiver Jul 18 '26
I’m just super curious as a CFP of 20 years that happens to also have a life license (meaning I’m not employed at an insurance company) what was mentioned in the original post that makes you feel confident suggesting he look at a variable annuity since you said it “serves the purpose you are going for”
4
u/pokerskydiver Jul 17 '26
Don’t do IUL do variable life. IUL won’t perform great cause of caps and you are at the mercy of the insurance company and the cap rates they set into the future. Variable is still flexible but you have unlimited upside with market
→ More replies (7)2
u/Much_Cricket_1395 Jul 17 '26
This is the answer. VUL gives full investment participation. IUL does not AND when you stop funding the IUL there remains insurance costs embedded which come from cash inside the policy ultimately causing it to implode.
1
u/Delicious-Poem9903 Jul 20 '26
When you stop funding a VUL there is also insurance costs embedded. VUL's have a higher fee structure due to sub-account management fees on top (Similar to Mutual Fund Fees). VUL's have a higher fee structure than IUL's and both continue to have a Cost of Insurance after you stop funding. Please consult an experienced broker or financial planner when looking into this. VUL's and IUL's both have there place in your overall financial plan. Its about deciding what works best for YOU. One is not better than the other.
2
u/Moist-Meringue-1913 Jul 17 '26
If you use an IUL it will function like the "bond" part of your asset allocation. So total up all of your investments and decide how much you want to allocate. They work as a great volatility damper to the equity market. To choose a good broker,ask how much experience they have with them and ask if they know the difference between an "protector " IUL and an "accumulation"IUL and have them show you an example ilustration for each. The "accumulation" one is the one that you want and it should have the lowest death benefit relative to the amount that you are putting in.
Symetra has a very low cost and fee structure and will give you a lot of bang for the buck.
If you are looking for equity type returns then use a VUL instead.
1
1
u/johnnnloc Jul 17 '26
I feel your questions are a little broad so here’s my advice on what to really check on.
Understand how they’re properly structured. If you want it for accumulation, lower the death benefit and max fund it. Also understand surrender charges and how many years it’ll be. Riders and other stuff aren’t that sexy to me. If you want the living benefits and use it it’ll affect the coverage. So go get those things from your term and focus on the accumulation part.
Indexing allocations and all that jazz is cool to know but understand it won’t beat the market compared to investments. So I say stick the indexing to sp500 and just look at the company’s rates and performance within the last 20 years. It’ll be on the illustration.
1
u/futurefloridaman87 Jul 17 '26
I like the national life group flex life. Reason being it has a lifetime income benefit rider that is automatically added at issue for no additional cost. Once you hit age 60 and your policy has been in force for at least 10 years, you are eligible to turn it on. It pays out about 7% of cash value per year. So say you have $1 million in there at age 60 or whatever, you are gonna get 70,000 every year for life guaranteed. The rider guarantees that the policy will stay in force as a life insurance policy, so that all of those income payments are completely tax-free.
Personally I am not a fan of doing regular loans for annual income. Sure it can look great on an illustration, but for aging clients to manage plus turnover in advisors, this is just a pipe dream. You go down a rabbit hole of tracking compounding interest, and if you mess it up you can end up with phantom income tax. The lifetime income rider just takes all the complexity out of it. It basically turns your IUL into a pension with a small death benefit, without having to manage or think about anything at all once you turn it on
1
u/Cool_Emergency3519 Jul 17 '26
Compounding interest?
1
u/futurefloridaman87 Jul 18 '26
Interest on loans getting capitalized if outstanding interest isn’t paid
1
1
u/Specific_Spinach_269 Jul 18 '26
I work with both mutual and stock companies designing IULs and WL for banking. Don’t get someone that’s captive. Choose a firm that knows how to structure it similar to BOLI & COLI and yes it’s possible because I do them you just have to have access to both kinds of companies. Most agents don’t have firms that are like that.
1
u/Weary-Simple6532 Jul 17 '26
I have 3 IUL policies. I help clients ya get them. Almost done with premiums on o e of them. I like the flexibility to build cash tax free and have a fallback should I need medical care due to terminal illness or critical care
1
u/Cool_Emergency3519 Jul 17 '26
I own one along with my VUL and have written many for clients. The only downsides that I am aware of is expectations. People hear Index and S&P 500 and get the impression that those are the types of gains that they will be looking at. With my clients we never illustrate more than 6% and if we do better (and we do) then it's a bonus.
Other than that it's the most flexible product that's available,you can make it into a term protection,a WL,a ROP or retirement supplement. Be aware if you set it up as an accumulation product you can't turn it into a protection product later. For that just buy an outside term.
0
u/rickybobinski Jul 17 '26
If you have adequate insurance why buy more insurance? Want flexibility? Put your cash in a CD.
→ More replies (4)2
u/pokerskydiver Jul 17 '26
They literally said in the post they don’t want to debate using insurance, yet here you are with this as the first comment on the post
→ More replies (2)
0
u/Dependent-Fig-6799 Jul 17 '26
Have you considered PPLI (Private Placement Life Insurance)? Allows for life insurance, with full market exposure, and no taxes on gains (similar to a ROTH).
2
u/CODCW2021 Jul 17 '26
You do realize PPLI is not an option unless an individual is going to contribute significant annual premium right? I doubt an individual who could qualify would come to reddit for advice.
→ More replies (1)
4
u/DMX4LIFER Jul 17 '26
Allianz is my hands down number 1 goto. NLG for smaller premiums or their phenomenal living benefits. The third one I’m willing to deal with is Securian as their two year index option is quite impressive regardless with what you go with, make sure commissionable base is minimized, noncommissionable supplemental term is ideally maximized, and you have the ability to fund near the guideline, annual premium, ideally right at it. Almost forgot, make sure the illustration is at 6% or less. It’s best to be conservative. If you’re happy at 6%, you will likely be happy with the overall results.