Can the IUL JUMP Strategy Really Produce Up to 300% More Retirement Income?

“Up to 300% more retirement income.”

That’s a number that should make you stop.

And question it.

If someone told me a retirement strategy could potentially produce up to approximately 300% more projected retirement income than another strategy, my first response wouldn’t be:

“Where do I sign?”

It would be:

“Show me exactly where the difference comes from.”

That’s what this article is about.

In certain modeled comparisons we’ve evaluated, the IUL JUMP Strategy has produced up to approximately 300% more projected retirement income than the 401(k), Traditional IRA, or comparable tax-deferred retirement strategy being evaluated.

That is not a guarantee.

It does not happen in every scenario.

It does not mean the IUL earns 300% more.

And it definitely doesn’t mean you can throw money into an IUL and magically triple your retirement.

The number comes from a modeled comparison.

So the real question isn’t:

“Is 300% possible?”

The better question is:

“What assumptions and mechanics have to produce that difference, and what happens when those assumptions change?”

First, What Does “300% More Retirement Income” Actually Mean?

This is where we need to get the language right.

The claim refers to projected retirement income in certain modeled comparisons.

It does not mean:

300% more investment return
300% more S&P 500 return
300% more indexed interest
300% more cash value
300% more death benefit
300% more policy return
300% guaranteed income
300% more money in every scenario

Those would be very different claims.

We’re comparing modeled retirement-income outcomes.

Here’s a Simple Example of What “300% More” Means

Let’s remove the insurance language for a second.

Suppose Strategy A produces:

$50,000 per year of projected retirement income.

Now suppose Strategy B produces:

$200,000 per year under the modeled comparison.

The difference is $150,000.

$150,000 divided by the original $50,000 equals 300%.

So Strategy B is producing 300% more projected retirement income than Strategy A in that example.

Another way of saying it is that Strategy B produces four times Strategy A’s projected income.

That’s what “300% more” means mathematically.

It does not mean a 300% return.

So How Can the Difference Get That Large?

There isn’t one magic switch.

Several pieces of the retirement-income equation can be different at the same time.

With the JUMP Strategy, the modeled difference can be influenced by:

Tax treatment
How retirement distributions are structured
The amount of value participating in the applicable indexed-crediting strategy
Matching Indexed Participating Loan activity
Policy-loan costs
Potential positive or negative loan arbitrage
Policy charges
Future JUMPs
Retirement age
Distribution amount
Longevity
Market and indexed-crediting assumptions

The up-to-300% result comes from the interaction of those pieces in certain modeled comparisons.

So let’s take them apart.

Difference #1: A Traditional 401(k) or IRA and an IUL Have Different Tax Structures

Traditional 401(k) and Traditional IRA dollars generally grow tax-deferred.

When taxable distributions are taken, federal income tax generally applies under current law, subject to the taxpayer’s individual circumstances.

An IUL is not a 401(k).

It’s not an IRA.

It’s permanent life insurance.

A properly structured and maintained non-MEC life insurance policy may potentially allow access to policy values through withdrawals to basis and policy loans without current income taxation under current federal rules, subject to applicable requirements.

That difference can affect how much of a gross distribution is potentially available for spending.

But taxes alone don’t explain the entire modeled difference.

Difference #2: The JUMP Strategy Changes the Funding Math

Let’s use our standard example.

The client contributes:

$10,000 per year.

Years 1 and 2 are straightforward.

The client puts in $10,000.

Then, beginning in Year 3 in the example, the Matching Indexed Participating Loan structure begins.

And this is where people can misunderstand the strategy.

The match is not free money.

It’s not a gift.

It’s not an employer contribution.

It’s not a bonus.

It’s not a tax credit.

100% of the matching amount is created as a policy loan under the strategy mechanics being modeled.

The loan proceeds are then modeled as being redeployed into the same policy as additional funding.

Here’s the Example Funding Schedule

Policy Year	Client Contribution	Matching Indexed Participating Loan	Total Annual Funding Shown
1	$10,000	$0	$10,000
2	$10,000	$0	$10,000
3	$10,000	$10,000	$20,000
4	$10,000	$10,000	$20,000
5	$10,000	$20,000	$30,000
6	$10,000	$20,000	$30,000
7	$10,000	$30,000	$40,000
8	$10,000	$30,000	$40,000
9	$10,000	$40,000	$50,000
10	$10,000	$40,000	$50,000
11	$10,000	$50,000	$60,000

Look at Year 11.

The client is still writing a:

$10,000 check.

The client isn’t suddenly contributing $60,000 out of pocket.

In this example, the additional $50,000 comes from Matching Indexed Participating Loan activity.

That creates a very different funding structure from simply contributing $10,000 into a retirement account every year.

But remember:

The additional $50,000 isn’t free.

It’s loan-funded.

Think of the JUMP Strategy as Two Buckets

Bucket 1: Your Money

In our example:

$10,000 per year.

That value participates in the applicable indexed-crediting strategy, subject to policy terms and charges.

Bucket 2: Matching Indexed Participating Loan Money

This is policy-loan-funded money being redeployed into the policy under the modeled strategy.

That loan-funded value is also modeled as participating in the applicable indexed-crediting strategy.

But it carries an applicable policy-loan cost.

That’s the critical distinction.

The Example Uses a 10% Cap and 0% Indexed-Crediting Floor

In the example we’ve been analyzing, both buckets have the same potential:

10% cap

and:

0% indexed-crediting floor.

Again, a 0% indexed-crediting floor does not mean the overall policy can never lose value.

Policy charges and loan costs still exist.

But it changes how negative index-price years are treated for the applicable indexed-crediting calculation.

Where Does the 6.87% Number Come From?

One historical analysis used in explaining the strategy examines annual S&P 500 price changes from 2006 through 2020.

Dividends are excluded because the policy is not directly invested in the S&P 500.

The analysis applies:

A 10% cap.

And:

A 0% floor.

For purposes of that analysis, negative annual S&P 500 price changes are replaced with 0%.

Positive annual changes above 10% are capped at 10%.

Average those annual capped-and-floored results and the historical result used in the analysis is approximately:

6.87%.

That is not the historical total return of the S&P 500.

It is not a guaranteed IUL crediting rate.

It is not a guaranteed policy return.

It is a historical capped-and-floored indexed-crediting calculation under those assumptions.

Now Introduce the 5% Loan Rate

With the policy structure we currently use for the IUL JUMP Strategy, the applicable loan rate is currently:

5%.

The applicable loan feature has a contractual maximum loan rate of:

6%.

Using the historical/modeling example:

6.87% – 5.00% = 1.87 percentage points.

That’s the simplified modeled positive spread.

That 1.87% Is Not Free Money Either

It’s a mathematical relationship between two assumptions.

If the applicable indexed crediting is higher than the applicable loan cost, you can have favorable loan economics under the simplified comparison.

But reverse the numbers.

If indexed crediting is:

and the loan cost is:

you now have an unfavorable 5-percentage-point spread in that simplified relationship.

Positive arbitrage is not guaranteed.

How Successive JUMPs Change the Model

Under assumptions used in one JUMP analysis, the base indexed-crediting assumption and the positive-arbitrage effect attributed to successive Matching Indexed Participating Loans produced modeled effective results reaching approximately:

8.74% at the Year 3 JUMP
11.61% at the Year 5 JUMP
14.48% at the Year 7 JUMP
17.35% at the Year 9 JUMP

“So You’re Saying the IUL Earns 17.35%?”

No.

That’s exactly what we’re not saying.

The 17.35% figure represents a modeled effective result created under the assumptions used in that JUMP analysis.

Calling that:

“A 17.35% IUL return”

would remove the context that makes the number meaningful.

Now You Can Start Seeing Where a Large Retirement-Income Difference Can Come From

The JUMP comparison isn’t saying:

“Our investment return is three times higher.”

The comparison is looking at an entirely different retirement-income structure.

You can have:

Different tax treatment
Different funding mechanics
Additional loan-funded policy value participating in the applicable indexed-crediting strategy
Loan economics
Different distribution mechanics
Different exposure to retirement taxation

When those factors interact favorably under the model, the projected retirement-income difference can become substantial.

But the Comparison Has to Be Apples to Apples

This is where I would challenge any 300% comparison.

Ask:

Are we using the same client contribution?

Are we using the same contribution period?

Are we using the same retirement age?

Are we measuring income over the same number of years?

Are taxes being handled clearly?

Are policy charges included?

Are policy-loan costs included?

Are future JUMPs assumed?

What happens without those JUMPs?

What happens if loan costs rise?

What happens if indexed crediting is weaker?

If those questions aren’t answered, I wouldn’t put much weight on the percentage yet.

Taxes Can Make Gross-Income Comparisons Misleading

Suppose two strategies both distribute $100,000.

That doesn’t automatically mean the client has the same amount available to spend.

Traditional tax-deferred retirement-account distributions are generally taxable under current federal rules, subject to individual circumstances.

Properly structured life insurance can have different distribution tax characteristics.

So a meaningful comparison should identify whether you’re comparing:

Gross retirement income

or:

Projected after-tax spendable retirement income.

Don’t quietly switch between the two.

What About Required Minimum Distributions?

Traditional tax-deferred retirement accounts can also be subject to required minimum distribution rules under current federal law.

An IUL is life insurance, not an IRA or qualified retirement plan, so it operates under a different legal and tax structure.

That can affect retirement distribution planning.

But again, that doesn’t mean one product automatically wins.

The differences need to be modeled.

The Retirement Distribution Assumption Matters Enormously

In modeling used with the IUL JUMP Strategy, we’ve evaluated retirement distributions at approximately:

12% per year of policy/account value

under specific assumptions.

That does not make 12% a universal safe withdrawal rate.

It does not mean every IUL can distribute 12% annually.

It does not guarantee lifetime income.

It is a modeled distribution level.

So if the up-to-300% comparison uses a distribution assumption around that level, the next step is to test whether the policy remains durable under less favorable conditions.

What Happens If the Client Lives to 95?

This is one of the first stress tests I would run.

Large retirement income looks great at 70.

It looks great at 75.

But what happens after decades of policy loans and distributions?

What does the policy look like at:

85?

90?

95?

If the strategy only looks good when the projection stops early, that’s something you need to know.

What Happens If Indexed Crediting Is Lower?

Don’t run only the historical/modeling assumption.

Lower it.

Then lower it again.

Ask what happens when the policy experiences several 0% indexed-crediting periods.

Especially after retirement distributions have started.

The 300% comparison should survive scrutiny, not just a favorable illustration.

What Happens If the Loan Rate Reaches 6%?

The current applicable rate is 5% under the policy structure we’re discussing.

The contractual maximum applicable loan rate is 6%.

So run 6%.

Then don’t stop there.

Run:

6% loan cost + lower indexed crediting.

That’s a much harder test.

And a much more useful one.

What Happens If You Don’t Qualify for Every Future JUMP?

The standard example shows planned JUMPs in policy Years:

3, 5, 7, 9 and 11.

Each planned JUMP requires a new application and approval for the applicable death-benefit increase.

Future approval isn’t guaranteed at initial policy issue.

Health can change.

Income can change.

Employment can change.

Your occupation can change.

Driving history can matter.

Risky hobbies can matter.

Existing insurance can matter.

Other underwriting factors can matter.

If the 300% comparison assumes all future JUMPs happen, I want to see the comparison without them too.

Does Missing a JUMP Mean Everything Falls Apart?

Not automatically under the mechanics we’re discussing.

A missed JUMP can pause the progression rather than automatically resetting the previously achieved strategy.

For example, if the client has already reached a $30,000 matching-loan level and doesn’t qualify for the next planned JUMP, the client may remain at the previously achieved level under the strategy mechanics being modeled.

The client may also be able to reapply at a later policy anniversary if circumstances improve, subject to applicable rules and approval.

But the retirement-income projection should be updated.

What Happens to the Policy Loans?

The loans don’t disappear.

Later JUMPs do not simply erase prior outstanding policy loans under the mechanics we’re discussing.

Policy indebtedness accumulates.

That’s why any large retirement-income projection should show you more than the income column.

You should also see:

Policy value
Outstanding policy indebtedness
Applicable loan costs
Projected net death benefit
Policy status over time

What Happens to the Death Benefit?

Outstanding policy indebtedness generally reduces the net death benefit payable under the contract.

That’s not necessarily a reason not to use policy loans.

It is a reason to model them correctly.

If your goal is maximum retirement income, the strategy may look different from a strategy designed to preserve a large inheritance.

Those are different objectives.

The 300% Number Is Not the Same as “Three Times Better”

This is another distinction worth making.

Even if one modeled retirement-income outcome is 300% higher than another, that doesn’t mean the strategy is automatically “300% better.”

Retirement strategies aren’t judged by one number.

You also need to think about:

Liquidity
Insurance need
Underwriting
Policy charges
Loan risk
Tax considerations
Flexibility
Legacy goals
Policy durability
Your comfort with nonguaranteed assumptions

The income number answers one question.

It doesn’t answer all of them.

What About the Approximately 40% More Than a Traditional IUL?

There’s another comparison we evaluate.

In certain modeled comparisons, the JUMP Strategy has produced approximately 40% more projected retirement income than the traditional IUL structure being compared.

Again, that doesn’t mean every JUMP design produces 40% more.

And it doesn’t mean a 40% higher investment return.

The modeled difference can come from the way the loan structure, funding mechanics, policy design, charges, crediting assumptions, and retirement distributions interact.

This comparison is particularly useful because both strategies are IUL-based.

It helps isolate the importance of design.

Here’s the Test I Would Use Before Believing 300%

Put the strategies side by side.

Then make the comparison disclose:

The client’s actual annual contribution.
The contribution period.
The retirement age.
The modeled retirement-income period.
The tax assumptions.
The assumed retirement-account return.
The IUL indexed-crediting assumptions.
The cap, floor, participation rate, and spread where applicable.
Policy charges.
Cost of insurance.
The current applicable policy-loan rate.
The contractual maximum applicable loan rate.
Matching Indexed Participating Loan activity.
Outstanding policy indebtedness.
Future JUMP assumptions.
Projected retirement distributions.
Projected net death benefit.
Longevity assumptions.

Then change the assumptions.

Stress Test #1: Lower Indexed Crediting

What happens to the projected retirement income?

Stress Test #2: Several 0% Crediting Periods

Especially after retirement distributions begin.

Stress Test #3: 6% Loan Cost

Use the contractual maximum applicable rate in the stress test.

Stress Test #4: 6% Loan Cost Plus Weak Crediting

Now you’re testing both sides of the loan economics at the same time.

Stress Test #5: No Future JUMPs

What happens if the client never qualifies for another planned increase?

Stress Test #6: Retire Five Years Early

Less accumulation.

More distribution years.

Stress Test #7: Live to 95 or Beyond

Make the strategy carry the retirement-income burden longer.

Stress Test #8: Reduce the Retirement Distribution

This test sounds strange.

It’s actually useful.

Suppose the model says you can access $180,000 annually.

But you only need $120,000.

What happens if you take less?

Does policy durability improve?

Does projected net death benefit improve?

Does the strategy create more margin?

The maximum illustrated distribution doesn’t automatically have to become your retirement budget.

Then Ask the Most Important Question

“Is the projected advantage still meaningful after the stress tests?”

Maybe the original model shows 300% more.

Maybe a more conservative model shows less.

Maybe much less.

That’s okay.

The purpose of the analysis isn’t to protect the headline.

It’s to understand the strategy.

What Would Make Me Distrust a 300% Comparison?

I’d get uncomfortable if:

The contribution amounts weren’t comparable.
One strategy used gross income and the other used after-tax income without saying so.
The retirement dates were different.
The distribution periods were different.
Policy charges were hidden.
Loan costs were ignored.
Positive arbitrage was treated as guaranteed.
Future JUMPs were treated as guaranteed.
The illustration stopped before later retirement years.
The IUL’s nonguaranteed values were discussed like guarantees.
The comparison couldn’t be rerun under weaker assumptions.

If you can’t see the assumptions, you can’t evaluate the conclusion.

What Would Make the Comparison More Useful?

Transparency.

Show the assumptions.

Show the math.

Show the loan balance.

Show the policy charges.

Show the taxes being assumed.

Show the bad years.

Show the 6% loan-rate scenario.

Show what happens without future JUMPs.

Show age 95.

Then let the client decide whether the tradeoffs make sense.

“Why Haven’t I Heard About This Before?”

That’s a question people naturally ask when they see a large modeled difference.

But unfamiliarity isn’t proof that something is good.

And it isn’t proof that something is bad.

The mechanics still have to stand on their own.

Don’t buy something because it feels secret.

Don’t reject it because it’s unfamiliar.

Run the math.

“Why Wouldn’t I Just Keep My 401(k)?”

You might.

A 401(k) can provide benefits an IUL does not replicate, including employer contributions where offered, qualified-plan tax treatment, investment access, and other plan features.

An IUL is permanent life insurance with a different cost structure, insurance component, funding framework, underwriting requirement, tax framework, and risk profile.

The question isn’t:

“Which product sounds better?”

It’s:

“What role should each strategy play in my retirement plan?”

The Psychological Problem With a Number Like 300%

A big number creates two bad reactions.

The first is:

“That’s incredible. I need this.”

The second is:

“That’s impossible. It’s obviously a scam.”

Neither reaction requires much thinking.

The harder response is:

“I’m not saying yes or no until I understand the model.”

That’s where you want to be.

Especially When You’re 55, 60, or 65

A 30-year-old can make a financial mistake and still have decades to recover.

At 60, you look at risk differently.

You’re thinking:

“I don’t want to make one big mistake right before retirement.”

You may also be thinking:

“What if we mess this up and regret it?”

Or:

“We should be able to handle this ourselves.”

And the thought you might never say during a financial meeting:

“I don’t want to ask my kids for help.”

That’s exactly why a 300% projection shouldn’t be enough to convince you.

You need to understand what could go wrong too.

Don’t Ask Me to Prove the Best Case

Ask me to try to break it.

Lower the crediting assumption.

Raise the loan cost.

Remove future JUMPs.

Retire earlier.

Live longer.

Take more income.

Put several weak years in the wrong part of retirement.

Then look again.

That’s a far better way to evaluate a retirement strategy.

The Bottom Line

Can the IUL JUMP Strategy really produce up to approximately 300% more projected retirement income?

In certain modeled comparisons we’ve evaluated, yes, the projected retirement-income difference has reached that range.

But that’s not the end of the analysis.

It’s the beginning.

The result is not guaranteed.

It isn’t a 300% return.

It isn’t 300% more indexed interest.

It isn’t 300% more cash value.

It isn’t 300% more death benefit.

It isn’t what every client should expect.

It’s a modeled retirement-income result produced by specific assumptions and mechanics.

So don’t ask:

“Can you show me the 300%?”

Ask:

“Can you show me exactly where every dollar of the difference comes from?”

Then:

“Can you show me what happens when the assumptions get worse?”

That’s the test.

The 300% isn’t the sales pitch. It’s the question.

Let the math do the talking.

How FPP Financial Tests the 300% Comparison

At FPP Financial, we use our Retirement Math Method™.

We’re not asking you to believe a percentage because it looks impressive on a slide.

We want to break down the comparison.

That means looking at:

Your actual contribution
Your retirement date
Your retirement-income goal
Your existing 401(k) and IRA assets
Your insurance need
Your liquidity
Tax assumptions
Policy charges
Indexed-crediting assumptions
Matching Indexed Participating Loan activity
The current applicable 5% loan rate
The contractual maximum 6% loan-rate stress test
Outstanding policy indebtedness
Future JUMP assumptions
No-future-JUMP scenarios
Weak and 0% indexed-crediting periods
Retirement distributions
Projected net death benefit
Longevity

Then we compare the strategies using clearly disclosed assumptions.

If the projected difference is large, we want to know why.

If it shrinks under stress, we want to know that too.

We don’t sell you a retirement strategy. We run the math and let you decide.

I don’t try to sell you on the strategy. I make the strategy prove itself with the math.

Want to See the 300% Comparison With Your Numbers?

Don’t schedule a meeting because somebody told you an IUL can produce 300% more retirement income.

Schedule it because you want to see whether the math actually works with:

Your age.

Your contribution.

Your retirement date.

Your current retirement accounts.

Your income goal.

Your assumptions.

Then make us show you the downside scenarios too.

Don’t just believe the 300% number. Make the strategy prove where the difference comes from with the math.

The number isn’t the reason to buy it. The assumptions behind the number are what you need to understand.

Show me exactly where the difference comes from.

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Disclosure

This material is for educational purposes only and is not intended as individualized investment, securities, tax, legal, accounting, retirement, underwriting, estate-planning, or insurance advice. Indexed universal life insurance is permanent life insurance and is not a qualified retirement plan, IRA, brokerage account, mutual fund, index fund, savings account, annuity, or direct investment in a market index.

The up-to-approximately-300% projected retirement-income result discussed in this article refers solely to certain modeled comparisons involving the IUL JUMP Strategy and a 401(k), Traditional IRA, or comparable tax-deferred retirement strategy under specific assumptions. It is not a universal result, expected result, or guarantee. It should not be interpreted as 300% more investment return, S&P 500 performance, indexed interest, cash value, death benefit, policy return, guaranteed lifetime income, or sustainable withdrawal capacity.

Changing contribution amounts, contribution periods, taxes, retirement timing, retirement-account returns, indexed-crediting results, policy charges, policy-loan mechanics, loan rates, future underwriting outcomes, future JUMPs, distribution amounts, longevity, or other assumptions can materially change the modeled comparison. Actual results may be substantially lower than illustrated or modeled results.

The approximately-40% projected retirement-income result discussed in this article refers to certain modeled comparisons involving the JUMP Strategy and the traditional IUL structure being evaluated. It is not a universal or guaranteed result and should not be interpreted as approximately 40% more investment return, indexed interest, cash value, death benefit, or policy return.

Life insurance illustrations contain guaranteed and nonguaranteed elements. Nonguaranteed illustrated values are not promises of future policy performance. Actual policy values, indexed-crediting results, retirement distributions, loan balances, and death benefits can differ materially from illustrated values.

Indexed universal life policies contain costs, limitations, risks, and contractual requirements. Suitability and appropriate policy design are determined by individual circumstances, insurance needs, insurability, financial resources, liquidity, objectives, and the terms of the applicable insurance contract.

A 0% indexed-crediting floor applies to the applicable indexed-crediting calculation under the example discussed and does not guarantee that overall policy value cannot decline. Cost of insurance, administrative expenses, policy-loan costs, withdrawals, distributions, and other policy mechanics can continue to affect policy values during a 0% indexed-crediting period.

Indexed universal life insurance does not directly invest policy cash value in the S&P 500 or another market index and does not provide ownership of underlying index securities through the indexed account. Indexed-crediting results should not be confused with market-index returns or direct investment performance. Dividends from the S&P 500 are not received as they would be through direct ownership of the underlying securities.

Caps, participation rates, spreads, crediting methods, loan rates, and other policy elements may be guaranteed or nonguaranteed as specified by the applicable insurance contract. Nonguaranteed elements may change where permitted by contract. Current approved policy information and the actual insurance contract should be reviewed before purchase.

Policy values from a properly structured and maintained non-MEC life insurance policy may potentially be accessed through withdrawals to basis and policy loans without current income taxation under current federal rules, subject to applicable requirements. Tax treatment can be affected by basis, MEC status, policy lapse, surrender, outstanding indebtedness, and other circumstances.

Policy loans create indebtedness and generally accrue applicable loan charges. Policy loans can reduce policy values and death benefits and can increase lapse risk. A policy that lapses or is surrendered with gain and outstanding indebtedness may create taxable income under applicable tax rules.

Life insurance death benefits are generally received income-tax-free by beneficiaries under current federal law, subject to applicable exceptions and individual circumstances. Outstanding policy indebtedness generally reduces the net death benefit payable under the applicable insurance contract.

Modified Endowment Contract status can materially change the tax treatment of policy distributions. Increasing death benefit does not by itself guarantee that a policy will avoid MEC status. Actual policy design, premium funding, applicable tax rules, underwriting approval, procedures, and contract provisions control.

Matching Indexed Participating Loans are policy loans. They are not free contributions, employer matches, bonuses, tax credits, guaranteed gains, or direct investments in a market index. Under the strategy described here, Matching Indexed Participating Loan proceeds are modeled as being redeployed into the same policy as additional funding. Associated policy indebtedness and applicable loan costs remain part of the policy economics.

With the policy structure discussed in this article, the applicable loan rate is currently 5%, with a contractual maximum loan rate of 6% for the applicable loan feature. The current applicable rate should not be interpreted as a guarantee that the rate will remain at 5%. Current and maximum loan provisions should be verified against current approved policy information and the actual insurance contract.

Positive arbitrage is not guaranteed. Periods in which applicable indexed crediting is below the applicable policy-loan cost can create unfavorable loan economics. Prolonged unfavorable loan economics combined with policy charges, distributions, and growing indebtedness can place additional pressure on policy values and increase lapse risk.

The historical 6.87% indexed-crediting example discussed in this article is based on an analysis of annual S&P 500 price changes from 2006 through 2020, excluding dividends, and applying the stated 10% cap and 0% indexed-crediting floor. Negative annual price changes were replaced by 0% and positive annual price changes above 10% were capped at 10% for purposes of that historical analysis. The resulting annual capped-and-floored figures averaged approximately 6.87%. Historical results do not predict future policy performance and should not be interpreted as a guaranteed future indexed-crediting rate, compound annual growth rate, net policy return, or historical total return of the S&P 500.

The simplified 1.87-percentage-point modeled positive spread represents the mathematical difference between the 6.87% historical indexed-crediting result used in the referenced model and the current 5% applicable policy-loan rate. It is not a representation of net policy return after cost of insurance, administrative expenses, other policy charges, withdrawals, distributions, or other factors and is not guaranteed to occur.

The modeled effective JUMP results of approximately 8.74%, 11.61%, 14.48%, and 17.35% are not S&P 500 returns, indexed-crediting rates, compound annual growth rates, sustainable withdrawal rates, net returns after policy charges, participation rates, cap rates, or guaranteed policy returns. They are modeled effective results under assumptions used in the referenced JUMP analysis, before accounting for applicable policy charges and other factors.

References to approximately 12% annual retirement distributions describe modeled distribution levels under specific assumptions. They should not be interpreted as universal safe withdrawal rates, guaranteed distribution rates, guaranteed lifetime income, or assurances that an indexed universal life policy can sustain those distribution levels.

Future JUMPs and associated death-benefit increases are subject to future underwriting and approval. Initial policy approval and prior successful JUMPs do not guarantee future increases. Health, income, employment, existing insurance, driving history, occupation, hazardous job duties, risky hobbies, and other applicable underwriting factors may affect eligibility for additional coverage.

Death-benefit increases associated with planned JUMPs are designed to create additional funding capacity under the intended policy design while managing applicable MEC limits. Increasing death benefit does not by itself guarantee non-MEC status. Actual policy design, premium funding, tax rules, underwriting approval, applicable procedures, and contract provisions control.

Under the strategy mechanics described, failure to qualify for a future JUMP does not necessarily mean prior successful JUMPs or the previously achieved matching-loan level automatically disappear. Actual policy rules govern each case, and projections should be updated when future JUMP assumptions change.

Comparisons between life insurance and 401(k)s, IRAs, or other retirement strategies involve materially different products, tax structures, contribution rules, liquidity characteristics, insurance benefits, costs, risks, and legal features. Any comparison should use clearly disclosed assumptions and should not imply that an IUL is legally, economically, or functionally identical to a qualified retirement plan or IRA.

Stress testing and financial modeling cannot predict future policy performance or eliminate risk. Actual outcomes are governed by the insurance contract, actual policy performance, applicable rates and charges, underwriting outcomes, client actions, tax law, and other circumstances.

FPP Financial does not provide tax, legal, accounting, investment, securities, or estate-planning advice. Individuals should consult qualified tax, legal, accounting, insurance, financial, estate-planning, and other appropriate professionals regarding their individual circumstances before purchasing or modifying life insurance, taking policy loans, accessing policy values, changing retirement-plan contributions, or implementing any retirement-income or insurance strategy discussed here.

Can the IUL JUMP Strategy Really Produce 300% More Retirement Income?