How Can You Tell if an IUL Retirement Illustration Is Too Good to Be True?

You put in $10,000 a year.

The illustration eventually shows hundreds of thousands, maybe millions, in policy value.

Then comes the retirement-income column.

$80,000 a year.

$120,000 a year.

Maybe considerably more.

And apparently you’re supposed to take that income for decades.

Your first thought might be:

“If this really works, why isn’t everybody doing it?”

Your second thought should be:

“Show me what has to happen for these numbers to work.”

That’s how I would approach any indexed universal life illustration being presented as a retirement-income strategy.

The biggest number on the page isn’t automatically wrong.

It also isn’t automatically meaningful.

You have to understand the machinery underneath it.

A Big IUL Illustration Is Not Automatically an Unrealistic IUL Illustration

This distinction matters.

You can’t look at a large projected cash value or retirement-income number and conclude:

“That’s impossible.”

Nor should you look at an insurance-company illustration and conclude:

“The company printed it, so that’s what I’m going to get.”

Neither approach tells you enough.

The useful question is:

What assumptions are creating the result?

Then:

How sensitive is the result when those assumptions change?

That’s where an illustration starts becoming useful.

Red Flag #1: Someone Talks About Projected Values Like They’re Guaranteed

This is the easiest red flag to spot.

If an illustration shows a nonguaranteed value of $2 million at some future age, that does not mean:

“You will have $2 million.”

If it shows $150,000 of projected annual retirement distributions, that does not mean:

“You are guaranteed $150,000 every year.”

Ask which values are guaranteed.

Then ask which values are nonguaranteed.

Keep those two categories separate in your head.

Red Flag #2: The Indexed-Crediting Assumption Is Treated Like a Fixed Return

An IUL indexed account does not work like a bank account paying a fixed interest rate.

It isn’t directly invested in the S&P 500 either.

Actual indexed crediting can vary from one crediting period to another based on the applicable index movement and the contract’s crediting mechanics.

Those mechanics can include:

• Caps
• Participation rates
• Spreads
• Floors
• Crediting periods
• Other applicable contractual provisions

If the illustration uses an assumed nonguaranteed rate, don’t let someone talk about it as though you’ll receive that exact rate every year.

You won’t know future indexed-crediting results in advance.

Red Flag #3: Someone Calls the Illustrated Rate an S&P 500 Return

This gets messy fast.

An IUL isn’t an S&P 500 index fund.

You don’t directly own the underlying stocks through the indexed account.

You don’t receive the index’s investment return in the same way a direct investor does.

That’s why language matters.

S&P 500 return and IUL indexed crediting are not interchangeable terms.

Red Flag #4: Nobody Explains Whether Dividends Are Included

Here’s a real example from the historical modeling we use when explaining the JUMP Strategy.

One historical analysis examines annual S&P 500 price changes from 2006 through 2020.

Dividends are excluded.

The analysis applies a:

10% cap

and a:

0% indexed-crediting floor.

For purposes of that historical analysis, negative annual price changes are replaced with 0%, while positive annual price changes above 10% are capped at 10%.

The resulting annual capped-and-floored figures average approximately:

6.87%.

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

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

It is not a guaranteed future crediting rate.

It is not a guaranteed policy return.

If someone simply labels a number like that “historical S&P return,” they’re describing the wrong thing.

Red Flag #5: The 0% Floor Is Presented as “You Can’t Lose Money”

This one should make you stop.

A 0% indexed-crediting floor can mean the applicable indexed account does not receive a negative index credit because the index declined, subject to the policy’s crediting terms.

It does not mean the entire policy can never decline in value.

Why?

Because the policy can still have:

• Cost of insurance
• Administrative charges
• Other applicable policy charges
• Policy-loan costs
• Withdrawals
• Retirement distributions

A 0% indexed-crediting year and a 0% change in total policy value are not the same thing.

Red Flag #6: The Illustration Looks Great, but Nobody Shows You the Charges

Don’t let the cash-value column distract you from the cost structure.

Ask to see the policy charges.

Then look farther out.

What do the charges look like at age 70?

80?

90?

If you’re planning to use an IUL for retirement, later-life policy economics matter.

A strategy that looks strong during accumulation still needs to function when you’re 85 and taking money from it.

Red Flag #7: The Retirement-Income Number Is Shown Without the Loan Balance

This is a major one.

Suppose someone says:

“Look. You can access $120,000 a year.”

Okay.

Now show me the policy indebtedness.

Policy loans are loans.

They create indebtedness.

Applicable loan charges matter.

Outstanding policy indebtedness can reduce policy values and the net death benefit and can contribute to lapse risk.

If retirement income is being illustrated through policy loans, the loan balance isn’t a footnote.

It’s part of the retirement strategy.

Red Flag #8: Someone Calls Policy Loans “Free Money”

They’re not.

They aren’t a free withdrawal from an insurance company.

They aren’t a bonus.

They aren’t an investment return.

A policy loan creates policy indebtedness and carries the applicable loan economics under the contract.

If the strategy intentionally uses policy loans, those mechanics need to be explained clearly.

Red Flag #9: The Current Loan Rate Is Presented Like It Can Never Change

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%.

I would want to see both.

Current 5%.

Stress-tested 6%.

Then I would combine 6% with weaker indexed crediting.

That’s much more revealing than pretending the current rate can never move.

Red Flag #10: Positive Arbitrage Is Presented as Guaranteed

Using the historical/modeling example:

6.87% historical capped-and-floored credited result

minus:

5.00% current applicable loan rate

equals:

1.87 percentage points.

That’s a simplified favorable spread in that model.

But now change the crediting result.

Suppose indexed crediting is 0%.

The simplified relationship becomes:

0% – 5% = an unfavorable 5-percentage-point spread.

Positive arbitrage isn’t guaranteed.

If you’re shown the 1.87% example, you should also be shown what happens when the relationship goes the other way.

Red Flag #11: Someone Calls 17.35% a Guaranteed IUL Return

This deserves its own section because numbers can lose their meaning when they’re repeated without context.

Under assumptions used in one JUMP analysis, the combination of 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

Those are not S&P 500 returns.

They are not IUL indexed-crediting rates.

They are not guaranteed policy returns.

They are not guaranteed compound annual growth rates.

They are not net returns after every applicable policy charge.

They are modeled effective results under assumptions used in the referenced JUMP analysis, before accounting for applicable policy charges and other factors.

If someone turns a modeled effective result into:

“This IUL earns 17.35%.”

Stop there.

Those aren’t the same statement.

Red Flag #12: The Matching Indexed Participating Loan Is Described Like a Free Match

This is especially important with the IUL JUMP Strategy.

Let’s use the standard $10,000 annual contribution example.

Look carefully at Year 11.

The client is not contributing $60,000 out of pocket.

In this example, the client contributes $10,000.

The additional $50,000 shown comes from Matching Indexed Participating Loan activity.

That additional amount is policy-loan-funded money that is modeled as being redeployed into the same policy.

It’s not free money.

It’s not a carrier gift.

It’s not an employer match.

It’s not a tax credit.

And the policy-loan economics remain part of the equation.

Red Flag #13: Nobody Tells You That the Loans Accumulate

A later JUMP does not simply erase earlier outstanding policy loans under the mechanics being modeled.

Loan activity accumulates.

So don’t look only at the growing funding amount.

Look at the growing indebtedness too.

Those two sides belong on the same page.

Red Flag #14: Every Future JUMP Is Treated Like It Was Guaranteed on Day One

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 is not guaranteed when the initial policy is issued.

Health can change.

Income can change.

Employment can change.

Your occupation can change.

Existing insurance can matter.

Driving history can matter.

Hazardous work and risky hobbies can matter.

Other underwriting factors can matter.

If an illustration relies heavily on future JUMPs, ask to see another projection assuming you don’t receive them.

Red Flag #15: You’re Told a Missed JUMP Destroys Everything You’ve Already Built

That’s the opposite problem.

Under the mechanics we’re discussing, a missed JUMP can pause the progression rather than automatically resetting the previously achieved strategy.

The client may remain at the previously achieved matching-loan level and may be able to reapply at a later policy anniversary if circumstances improve, subject to applicable rules and approval.

The point is to understand what actually happens.

Not the most optimistic version.

Not the scariest version.

The actual mechanics.

Red Flag #16: The Illustration Uses a Huge Retirement Distribution Without Explaining How It Was Chosen

Ask:

“Why this amount?”

Was it selected because it fits your retirement-income need?

Or was it selected because it’s the biggest number the illustration could display under the assumptions being used?

Those are very different design philosophies.

What About Taking Approximately 12% Per Year?

Under 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 is a modeled distribution level.

It is not a universal safe withdrawal rate.

It isn’t guaranteed lifetime income.

It doesn’t mean every IUL can distribute 12% annually without creating policy stress.

If you’re shown a distribution around that level, ask to see what happens under weaker crediting, higher loan costs, longer life, and larger outstanding indebtedness.

Red Flag #17: The Illustration Stops Before the Difficult Years

Imagine you’re 58.

The illustration looks beautiful through age 85.

But your parents lived into their 90s.

Why are we stopping at 85?

Run 95.

Run 100 where appropriate.

Later-life policy values matter because those can be the years when:

• Policy charges have been occurring for decades
• Policy indebtedness may be substantial
• Retirement distributions have continued for years
• There may be little room to rebuild after a mistake

Don’t end the story before the difficult chapter.

Red Flag #18: Nobody Shows You What Happens If You Retire Early

If the policy assumes retirement at 70, run 65.

If it assumes 65, run 60.

Early retirement creates pressure from both sides.

You lose accumulation years.

And you may add distribution years.

A five-year difference can materially change the retirement-income math.

Red Flag #19: The Illustration Never Shows a Bad Sequence

An average can hide the order in which results occur.

A few weak years during accumulation can be very different from a few weak years after substantial retirement loans have already accumulated.

So ask:

“What happens if several weak or 0% indexed-crediting periods occur after I start taking retirement income?”

That’s a harder test.

It’s also a more useful one.

Red Flag #20: The Illustration Is Never Tested at the 6% Maximum Loan Rate

If the applicable loan feature has a contractual maximum of 6%, I want to see 6%.

Not because I’m predicting the loan rate will reach 6%.

Because I’m trying to understand what the strategy looks like if it does.

Then combine it with lower indexed crediting.

Then add retirement distributions.

That’s how you find out how much margin the strategy has.

Red Flag #21: You Only See Gross Death Benefit

If policy indebtedness exists, ask to see the projected net death benefit too.

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

So if legacy matters to you, don’t just ask:

“What’s my death benefit?”

Ask:

“What is projected to reach my beneficiaries after outstanding indebtedness?”

Red Flag #22: “Tax-Free Retirement” Is Used Without Explaining the Conditions

Tax treatment is one of the reasons people consider permanent life insurance in retirement planning.

But “tax-free” should not be treated like a magic phrase.

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.

But basis matters.

MEC status matters.

Policy status matters.

Lapse matters.

Surrender matters.

Outstanding indebtedness matters.

If a policy with gain and outstanding indebtedness lapses or is surrendered, taxable income can potentially result under applicable tax rules.

Ask how the strategy is designed to monitor that risk.

Red Flag #23: The 300% Number Is the Entire Sales Pitch

This one matters to us because we discuss a very large modeled result.

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.

If I tell you that and your response is:

“Prove it.”

Good.

That’s exactly what you should say.

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

What Does “Up to 300% More” Actually Mean?

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% guaranteed income

It refers to certain modeled retirement-income comparisons under specific assumptions.

Those assumptions can involve:

• Client contributions
• Taxes
• Distribution structure
• Indexed-crediting assumptions
• Matching Indexed Participating Loan mechanics
• Loan rates
• Policy charges
• Future JUMPs
• Retirement timing
• Longevity

Change the assumptions and the result can change.

The 300% Test

If someone shows you an up-to-300% projected retirement-income difference, ask them to put both strategies side by side.

Then ask:

Are the contribution amounts comparable?

Are the contribution periods comparable?

Are the retirement dates comparable?

Are the tax assumptions clearly shown?

Are the distribution periods comparable?

Are policy charges included?

Are policy loans included?

Are loan costs included?

What happens without future JUMPs?

What happens at 6% loan cost?

What happens with lower indexed crediting?

How long does the retirement-income projection run?

Now the 300% number has context.

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

Red Flag #24: The Approximately 40% Traditional-IUL Difference Isn’t Explained Either

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

Again, don’t stop at 40%.

Ask why.

What is different about the loan mechanics?

What is different about funding?

What is different about the death-benefit design?

Are the client-funded contributions comparable?

Are the same crediting assumptions being used where appropriate?

Are the loan costs clearly shown?

Are the same retirement ages and longevity assumptions being used?

A percentage without the assumptions behind it doesn’t tell you enough.

Red Flag #25: Nobody Can Explain the Illustration Without Using Marketing Language

This is my favorite test.

Take away the phrases:

“Tax-free retirement.”

“Market upside without market downside.”

“Infinite banking.”

“Free money.”

“Massive retirement income.”

Now explain the strategy.

Where does the money come from?

What are the charges?

How does indexed crediting work?

What does the floor actually protect?

What do the loans cost?

What happens when the spread is unfavorable?

What happens if future underwriting doesn’t work?

What happens if the client lives longer?

What happens to the death benefit?

If the strategy still makes sense after removing the sales language, now you have something worth analyzing.

Here’s a Simple Way to Test Any Big IUL Retirement Number

Suppose an illustration shows $150,000 per year of projected retirement income.

Don’t immediately ask:

“How do I buy it?”

Ask:

“Can you show me the same policy producing $150,000 under the assumptions you’re using, then show me what happens when we make the assumptions worse?”

Run:

1. The original illustration.
2. A lower indexed-crediting assumption.
3. Multiple 0% indexed-crediting periods.
4. The current applicable 5% loan rate.
5. The contractual maximum 6% loan rate.
6. 6% loan cost combined with weaker crediting.
7. No future JUMPs.
8. Retirement five years earlier.
9. A larger unexpected retirement expense.
10. Survival to age 95 or beyond.

Now compare.

The Goal Isn’t to Make the Illustration Fail

You’re not trying to prove the IUL is bad.

You’re not trying to prove it’s good either.

You’re trying to find out how much pressure the strategy can handle before the retirement outcome changes materially.

That’s a much better question.

What If the Numbers Still Look Strong After the Stress Test?

Then you have more useful information than you had from the original illustration.

You know the strategy isn’t relying solely on one perfect scenario.

That still doesn’t turn nonguaranteed projections into guarantees.

But it helps you understand the range of modeled outcomes.

What If the Numbers Fall Apart?

Then you’ve learned something before committing decades of money.

Maybe the funding needs to change.

Maybe the retirement distribution needs to change.

Maybe the death-benefit structure needs to be reconsidered.

Maybe the assumptions were too aggressive.

Maybe the strategy isn’t a good fit for the specific objective.

That’s useful information.

The Real Fear Behind “Is This Too Good to Be True?”

For someone approaching retirement, this isn’t just an insurance question.

It’s an identity question.

You’ve spent 30 or 40 years accumulating money.

You don’t have another 40 years to recover from a major retirement mistake.

So when an illustration shows a number that seems almost too attractive, part of you wants it to be true.

Another part is thinking:

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

Then there’s the thought you might not say out loud:

“We should be able to handle this ourselves.”

And behind that:

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

That’s why the illustration needs to do more than impress you.

It needs to make sense to you.

Before You Sign Anything, You Should Be Able to Answer These Questions

• How much am I contributing?
• How long am I expected to contribute?
• Why do I need the life insurance?
• What are the policy charges?
• What values are guaranteed?
• What values are nonguaranteed?
• How does indexed crediting work?
• What does the 0% floor actually protect?
• What is the current applicable policy-loan rate?
• What is the contractual maximum applicable loan rate?
• How much policy indebtedness is projected?
• What happens during negative arbitrage?
• What happens if future JUMPs aren’t approved?
• What happens if I retire early?
• What happens if I need more income?
• What happens if I live to 95 or 100?
• What happens if the policy lapses?
• What is the projected net death benefit after indebtedness?
• How was my projected retirement-income amount determined?
• What assumptions produce the comparison with my alternatives?

If you can’t answer those questions, the big number at the bottom of the illustration shouldn’t be the thing that makes the decision for you.

The Bottom Line

How can you tell if an IUL retirement illustration is too good to be true?

Don’t judge it by how large the projected number is.

Judge the assumptions underneath the number.

If somebody presents nonguaranteed values like guarantees, that’s a problem.

If policy loans are described as free money, that’s a problem.

If the 0% floor is described as protection against every kind of policy loss, that’s a problem.

If a modeled 17.35% effective result is called a guaranteed IUL return, that’s a problem.

If future JUMPs are treated like they’re guaranteed, that’s a problem.

If a 300% retirement-income comparison can’t be broken down assumption by assumption, that’s a problem.

And if nobody will show you what happens when the assumptions get worse, that’s a problem.

Don’t ask an illustration to tell you what you want to hear.

Make it answer the hard questions.

Let the math do the talking.

How FPP Financial Tests an IUL Illustration

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

The goal isn’t to find the biggest number we can put on a page.

The goal is to understand where the number comes from.

We look at:

• Your actual contribution
• Your retirement date
• Your retirement-income goal
• Your liquidity
• Your insurance need
• Policy charges
• Guaranteed and nonguaranteed values
• Indexed-crediting assumptions
• Client-funded dollars
• Matching Indexed Participating Loan activity
• The current applicable 5% loan rate
• The contractual maximum 6% loan-rate stress test
• Outstanding policy indebtedness
• Projected net death benefit
• Future JUMP assumptions
• No-future-JUMP scenarios
• Lower crediting
• 0% indexed-crediting periods
• Earlier retirement
• Higher distributions
• Longer life

Then we compare the strategy with the alternatives you’re actually evaluating.

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 What Happens When We Stress-Test the Numbers?

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.

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

Neither result is guaranteed.

And neither number should be accepted because it sounds impressive.

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.

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

Show me exactly where the difference comes from.

Then make the model show you what happens when the assumptions don’t cooperate.

Let the math do the talking.

Schedule Your Tax-Free Retirement Strategy Meeting

Explore More

• How to Read an IUL Illustration Before You Buy a Policy
• How to Stress-Test an IUL Before You Use It for Retirement
• 25 Questions to Ask Before Buying an IUL for Retirement

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.

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.

Projected retirement income, policy values, death benefits, indexed-crediting results, and other nonguaranteed illustrated values are not guaranteed unless specifically identified as guaranteed under the applicable insurance contract. Actual policy performance may differ materially from illustrated results.

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.

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.

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.

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.

The up-to-approximately-300% projected retirement-income result cited in this article refers to certain modeled comparisons involving the IUL JUMP Strategy and a 401(k), Traditional IRA, or comparable tax-deferred retirement strategy. It is not a universal result or guarantee and should not be interpreted as 300% more investment return, indexed interest, policy-loan arbitrage, net policy return, sustainable withdrawal rate, guaranteed lifetime income, death benefit, cash value, or S&P 500 performance. Contributions, taxes, retirement timing, indexed-crediting results, policy-loan mechanics, loan rates, policy charges, future JUMPs, distributions, longevity, and other assumptions can materially alter the comparison.

The approximately-40% projected retirement-income result refers to certain modeled comparisons involving the JUMP Strategy and the traditional IUL structure being evaluated. It is not a universal result or guarantee and does not represent approximately 40% more investment return, indexed interest, cash value, or death benefit. Funding, policy charges, crediting assumptions, loan provisions, distributions, future JUMPs, and longevity can materially alter the comparison.

Stress testing cannot predict future policy performance or eliminate risk. It is an analytical process used to examine how changes in assumptions may affect projected results. Actual outcomes are governed by the insurance contract, actual policy performance, applicable rates and charges, 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.