Should Both Spouses Use the IUL JUMP Strategy for Retirement?

A married couple sits down to look at an IUL JUMP Strategy.

They like what the numbers show for one spouse.

Then somebody asks the obvious question:

“Should we do this for both of us?”

That’s where the conversation gets more interesting.

Because two spouses using the strategy does not simply mean taking one illustration and multiplying everything by two.

You have two people.

Two ages.

Two health histories.

Two insurance needs.

Two underwriting outcomes.

Two policies.

Two sets of policy charges.

Two future JUMP sequences.

And potentially two separate sources of policy value that could be evaluated as part of the household retirement plan.

The First Question Isn’t “Can We Both Do It?”

The better question is:

“Does using the strategy on both spouses improve the household retirement plan enough to justify two policies?”

That’s the math I want to see.

Because a married couple doesn’t retire as two unrelated illustrations.

You retire as one household.

Start With the Household, Then Test Each Spouse

Before looking at two IUL policies, look at everything the couple already has.

• 401(k) balances
• Traditional IRAs
• Roth accounts
• Taxable investments
• Cash
• Pensions
• Social Security
• Real estate
• Debt
• Existing life insurance
• Retirement spending

Then ask what problem another strategy is supposed to solve.

More retirement-income flexibility?

More death-benefit protection?

Another potential source of retirement cash flow?

Legacy planning?

Survivor protection?

If you can’t identify the job, don’t start by buying two policies.

One Policy and Two Policies Solve Different Problems

Suppose the husband owns one properly structured IUL and the wife doesn’t.

That policy creates one set of:

• Cash values
• Death benefits
• Policy charges
• Policy loans
• Underwriting outcomes
• Future JUMP opportunities

If both spouses separately own policies, you now have two independent insurance contracts.

That can create more planning possibilities.

It also creates more moving parts.

Two Policies Can Create Two Separate Retirement-Income Paths

Imagine both spouses eventually build meaningful policy values.

Instead of relying on one policy for all planned IUL retirement distributions, the household may potentially have access to policy values from two separate contracts, subject to each policy’s provisions and condition.

That can create choices.

Maybe one policy is performing better.

Maybe one has less policy indebtedness.

Maybe one spouse’s policy has more projected net death benefit that the couple wants to preserve.

Maybe one policy has more room for retirement distributions under the current model.

Those choices can matter later.

But Two Policies Do Not Automatically Mean Twice the Retirement Income

This needs to be clear.

If one JUMP illustration shows $100,000 of modeled retirement income, you cannot automatically say:

“Great. Two policies means $200,000.”

The second spouse may have a different:

• Age
• Gender
• Health classification
• Insurance cost
• Death-benefit requirement
• Funding level
• Underwriting outcome
• Future JUMP outcome

Each policy has to prove itself separately.

This Is Where #94 Is Different From Simply Asking Whether Both Spouses Should Own an IUL

The JUMP Strategy adds another layer.

Each spouse has a separate future progression.

A successful JUMP for one spouse does not mean the other spouse automatically qualifies.

One spouse could continue progressing through planned JUMPs while the other spouse pauses at an earlier level.

That’s a household-planning issue that doesn’t exist in the same way with a single policy.

Let’s Look at the Standard JUMP Example

We’ll use the familiar example of one insured contributing:

$10,000 per year.

The $60,000 in Year 11 Does Not Mean the Client Writes a $60,000 Check

The client’s out-of-pocket contribution in this example remains:

$10,000.

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

Those matching amounts are policy loans.

They aren’t free money.

They aren’t bonuses.

They aren’t an employer match.

They aren’t tax credits.

Under the strategy mechanics being modeled, the loan proceeds are redeployed into the same policy as additional funding.

Now Imagine Both Spouses Have Their Own $10,000 Strategy

For illustration purposes only, suppose both spouses can comfortably fund:

$10,000 per year each.

The household out-of-pocket commitment would be:

$20,000 per year.

But that does not mean the policies will remain identical.

They may start differently.

They may receive different underwriting classifications.

Future JUMP approvals may differ.

Actual policy values may differ.

And the eventual retirement-income capacity may differ.

Each Spouse Has to Qualify Independently

This is one of the biggest issues with a two-spouse JUMP plan.

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

Underwriting factors can include:

• Health
• Income
• Employment
• Existing insurance
• Driving history
• Occupation
• Hazardous job duties
• Risky hobbies
• Other applicable underwriting factors

Spouse A’s approval has nothing to do with guaranteeing Spouse B’s approval.

Here’s a More Realistic Couple Scenario

Suppose both spouses successfully start separate strategies.

Both complete the Year 3 JUMP.

Both complete the Year 5 JUMP.

Then before Year 7, one spouse develops a health issue.

That spouse does not receive approval for the next planned increase.

The other spouse remains healthy and receives approval.

Now the household has two different JUMP paths.

That Does Not Automatically Mean the First Spouse’s Strategy Goes Back to Zero

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

The spouse who does not qualify 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.

Meanwhile, the other spouse may continue through the planned progression.

That’s why two-spouse modeling should never assume both people march through every future JUMP together.

Run a Split-Underwriting Scenario

If you’re seriously evaluating two JUMP strategies, I’d want to see at least these scenarios:

• Both spouses receive all modeled future JUMP approvals
• Spouse A stops qualifying after Year 5
• Spouse B stops qualifying after Year 5
• Neither spouse receives additional future JUMPs after Year 5

Then look at the household retirement-income projection.

That tells you whether the plan relies too heavily on future underwriting going perfectly.

Financial Underwriting Can Matter Too

Health isn’t the only issue.

The requested amount of life insurance generally needs to be financially justifiable under applicable underwriting standards.

If one spouse earns substantially more than the other, the available death-benefit design and future increases may not look identical.

So don’t assume:

“We’re married, so whatever one spouse qualifies for, the other one gets too.”

That’s not how individual underwriting works.

Should the Higher-Income Spouse Automatically Get the Bigger Strategy?

Not automatically.

Income matters for financial underwriting.

But retirement planning also needs to consider:

• Age
• Health
• Insurance need
• Expected retirement date
• Existing retirement assets
• Survivor needs
• Available cash flow

The spouse with the higher income may not always have the stronger insurance economics.

Run both.

Age Differences Can Matter More Than Couples Expect

Suppose one spouse is 48 and the other is 56.

They may have the same household retirement date.

But they don’t have the same accumulation runway.

The younger spouse potentially has more years before retirement.

The older spouse may need the policy to begin doing retirement work sooner.

That can produce very different modeled outcomes.

Health Differences Can Change the Economics Too

Imagine one spouse receives a preferred underwriting classification while the other receives a less favorable classification.

Insurance costs can differ.

Cash-value accumulation can differ.

Death-benefit structure can differ.

Retirement-income projections can differ.

That’s why a household strategy should be built from two actual approved cases, not one illustration duplicated twice.

Two Policies May Create More Survivor Flexibility

Suppose both spouses reach retirement with separate policies.

Then one spouse dies earlier than expected.

The deceased spouse’s policy enters the death-claim process under its contract.

The surviving spouse’s policy remains a separate contract.

That can matter because the surviving spouse may still have their own:

• Policy value
• Death benefit
• Policy-loan provisions
• Retirement-income strategy

Meanwhile, the household may also receive whatever net death benefit is payable from the deceased spouse’s policy.

That’s Very Different From Having One Policy

If only one spouse is insured under the strategy and that spouse dies, that policy’s retirement-income role ends with the death claim.

If the surviving spouse separately owns another policy on their own life, that second policy can potentially continue as part of the survivor’s retirement plan.

That doesn’t automatically make two policies better.

But it is a meaningful difference to model.

What Happens to Outstanding Loans When One Spouse Dies?

Each policy stands on its own.

Outstanding policy indebtedness on the deceased spouse’s policy generally reduces the net death benefit payable under that contract.

It does not simply become indebtedness on the surviving spouse’s separate IUL.

The survivor’s policy has its own values, loans, charges, and contractual provisions.

That’s Why Household Planning Needs Two Net Death-Benefit Columns

If both spouses have policies, don’t show me only:

Policy A cash value

and:

Policy B cash value.

Show me:

• Policy A projected net death benefit
• Policy B projected net death benefit
• Policy A projected indebtedness
• Policy B projected indebtedness
• Household retirement income if both live
• Survivor income if Spouse A dies first
• Survivor income if Spouse B dies first

Now we’re actually doing married-couple planning.

Two Policies Also Mean Two Sets of Costs

This shouldn’t be ignored.

Each IUL is a separate insurance contract.

Each can have:

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

So the question isn’t:

“Can we afford $10,000 each?”

The better question is:

“Does committing $20,000 of household cash flow to two policies create a stronger overall retirement plan than the alternatives we’re comparing?”

Don’t Starve the Rest of the Retirement Plan to Fund Two IULs

If funding two policies means you no longer have enough:

• Emergency cash
• Liquidity
• 401(k) contributions
• Employer-match opportunities
• Debt-service capacity
• Money for near-term expenses

then the two-policy strategy needs another look.

An IUL is designed as a long-term insurance contract.

Don’t force household cash flow into two long-term policies if doing so leaves the rest of the financial life fragile.

Now Look at the Loan Mechanics

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

5%.

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

6%.

If both spouses use the strategy, both policies need to be tested under the applicable loan assumptions.

Don’t Stress-Test One Policy and Assume the Other Will Behave the Same Way

For each spouse, run:

Current applicable loan rate: 5%.

Then:

Maximum loan-rate stress test: 6%.

Then combine the household results.

If the retirement plan only looks attractive when both policies remain at today’s applicable 5% rate forever, you haven’t stress-tested the household plan very hard.

Both Client-Funded and Loan-Funded Value Participate in the Example Strategy

Under the example, the client-funded value and the Matching Indexed Participating Loan-funded value participate under the same applicable indexed-crediting strategy.

The example uses a potential:

10% cap

and:

0% indexed-crediting floor.

The loan-funded side also carries the applicable loan cost.

Positive Arbitrage Can Help the Modeled Economics

Suppose applicable indexed crediting were:

8%.

And the applicable loan cost were:

5%.

The simplified economic relationship would be:

8% – 5% = a favorable 3-percentage-point spread.

That’s a simplified example of positive arbitrage.

But Couples Need to See the Bad Version Too

Suppose both policies experience a 0% indexed-crediting result while the applicable loan cost is 5%.

The simplified relationship becomes:

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

Now imagine both policies are also being used for retirement distributions.

That’s a household stress test worth seeing.

A 0% Floor Does Not Mean the Policies Cannot Decline

The 0% floor in the example applies to the applicable indexed-crediting calculation.

It doesn’t stop:

• Cost of insurance
• Administrative charges
• Applicable policy-loan costs
• Withdrawals
• Retirement distributions

Overall policy values can still decline.

With two policies, that needs to be monitored twice.

Where Does the 6.87% Historical Example Come From?

One historical analysis used in our JUMP modeling examined annual S&P 500 price changes from 2006 through 2020, excluding dividends.

The analysis applied:

A 10% cap

and:

A 0% indexed-crediting floor.

Negative annual price changes were replaced by 0% for purposes of that historical indexed-crediting calculation.

Positive annual price changes above 10% were capped at 10%.

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

6.87%.

6.87% Is Not an S&P 500 Return

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

It’s not a guaranteed future indexed-crediting rate.

It’s not a guaranteed policy return.

It’s the historical average credited result from that specific capped-and-floored analysis of annual S&P 500 price changes, excluding dividends.

The Simplified Historical/Modeling Spread

Using the current applicable 5% loan rate:

6.87% – 5.00% = 1.87 percentage points.

That’s the simplified favorable spread used in that historical/modeling example.

It isn’t guaranteed to repeat.

What Do Successive JUMPs Do in the Model?

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 aren’t S&P 500 returns.

They aren’t indexed-crediting rates.

They aren’t guaranteed policy returns.

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

Now Imagine Two Different JUMP Outcomes

Suppose Spouse A reaches the Year 9 JUMP under the assumptions being modeled.

Spouse B stops progressing after the Year 5 JUMP.

You should not apply Spouse A’s later modeled effective result to Spouse B.

Each strategy needs its own projection.

Then the two are combined at the household level.

What About Taking Approximately 12% in Retirement?

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’s a modeled distribution level.

It’s not a universal safe withdrawal rate.

It’s not guaranteed lifetime income.

And having two policies doesn’t make 12% automatically sustainable on either policy.

Maybe You Don’t Need to Pull From Both Policies at the Same Time

This is where two-policy planning can become more flexible.

Suppose retirement begins and one policy has stronger values relative to its indebtedness.

The couple could evaluate whether using one policy more heavily while preserving the other makes sense under the actual numbers.

Or they could split retirement distributions between both policies.

Or preserve one policy more heavily for death benefit.

The point isn’t that one of those choices is automatically correct.

The point is that two policies can create more choices.

One Policy Could Potentially Be More Income-Focused

Imagine one spouse has a much stronger need for life insurance protection.

You may want to preserve more projected net death benefit on that spouse’s policy.

The other policy could potentially be modeled more heavily around retirement-income access.

Again, the actual insurance need and policy economics have to support the design.

That’s Different From Making Both Policies Identical

Married couples often assume “fair” means identical.

Same contribution.

Same death benefit.

Same distribution.

Same strategy.

But the better household result may come from two policies doing different jobs.

Now Let’s Talk About the Up-to-300% Comparison

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.

For a married couple, that number should create a question, not a conclusion.

“What happens when we run our household numbers?”

Do Not Double the 300% Claim Because There Are Two Spouses

Two policies do not mean 600% more retirement income.

That’s not how the comparison works.

The up-to-approximately-300% figure refers to certain modeled retirement-income comparisons under specific assumptions.

It doesn’t become larger simply because two spouses participate.

And 300% More Projected Retirement Income Does Not Mean 300% More Return

It doesn’t mean 300% more indexed interest.

It doesn’t mean 300% more cash value.

It doesn’t mean 300% more death benefit.

It doesn’t mean every couple receives 300% more retirement income.

It’s a modeled retirement-income comparison.

Make the Couple’s Version Prove Itself

If the household comparison shows a large projected difference, ask:

“Show me exactly where the difference comes from.”

Then break it down by spouse.

How much is coming from Policy A?

How much is coming from Policy B?

What happens if Policy A stops receiving future JUMPs?

What happens if Policy B does?

What happens if both do?

What happens at the 6% maximum loan-rate stress test?

That’s how you test the claim.

What About Approximately 40% More Than a Traditional IUL?

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

Again, don’t automatically double anything because there are two policies.

Run the JUMP design and traditional IUL comparison separately for each spouse under comparable assumptions.

Then compare the household results.

The Biggest Risk With Two Policies May Be Overcommitting Cash Flow

It’s easy to look at two attractive illustrations and think:

“Why wouldn’t we do both?”

Because $20,000 a year for a household is different from $10,000.

And life happens.

A job disappears.

A business has a bad year.

A parent needs help.

A roof needs replacing.

Healthcare costs rise.

Someone wants to retire earlier.

Before funding two long-term policies, ask:

“Can we comfortably maintain this without putting pressure on everything else?”

Don’t Build a Strategy That Requires Both Spouses to Keep Working Forever

Suppose the couple expects both incomes to continue for 15 years.

What if one spouse stops working in five?

Can the household still support both policies?

What if one spouse becomes disabled?

What if one wants to retire early?

What if the business income falls?

The funding plan needs to survive real life.

Stress-Test the Household Before Starting Two JUMP Strategies

I’d want to see:

1. The couple’s current retirement assets.
2. Their emergency reserves.
3. Their debt.
4. Their retirement-income target.
5. Their expected retirement dates.
6. Each spouse’s insurance need.
7. Each spouse’s underwriting outcome.
8. One-policy household scenario.
9. Two-policy household scenario.
10. Different contribution amounts for each spouse.
11. Both spouses receiving future JUMPs.
12. Only Spouse A receiving future JUMPs.
13. Only Spouse B receiving future JUMPs.
14. No additional future JUMPs for either spouse.
15. Current applicable 5% loan cost.
16. Contractual maximum 6% loan-cost stress test.
17. Lower indexed-crediting assumptions.
18. Several 0% indexed-crediting years.
19. Retirement five years earlier than planned.
20. One spouse stopping work early.
21. One spouse dying early.
22. Spouse A living to 95.
23. Spouse B living to 95.
24. Both spouses living well into their 90s.
25. Projected household retirement income.
26. Projected policy indebtedness on each contract.
27. Projected net death benefit on each contract.

The Survivor Scenario Is Especially Important

Most couples model retirement while both people are alive.

But eventually, one spouse is likely to survive the other.

So run both directions.

Spouse A dies first.

What income does Spouse B still have?

What happens to Social Security?

What pension income changes?

What net death benefit may be payable?

What does Spouse B’s own IUL look like?

Then reverse it.

Spouse B dies first.

Run the same math.

The Survivor May Need More Flexibility Than the Couple

Two people sharing one household often have efficiencies that one survivor loses.

The mortgage doesn’t necessarily get cut in half.

Property taxes don’t get cut in half.

Utilities don’t get cut in half.

Healthcare can still be substantial.

And some income sources can change after the first death.

That makes survivor planning one of the strongest reasons to look beyond a single combined retirement-income number.

This Is Where the Psychology Gets Real

You’re not simply trying to maximize an illustration.

You’re thinking:

“If I die first, is my spouse actually going to be okay?”

And:

“If my spouse dies first, can I handle all of this myself?”

Then there is the thought neither person wants to admit:

“What if one of us lives another 20 years alone?”

That’s where independence becomes the real goal.

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

“We should be able to handle this ourselves.”

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

Two Policies Can Create More Options, but More Options Aren’t Free

You get another insurance contract.

Another potential source of policy value.

Another death benefit.

Another future JUMP path.

But you also get:

Another funding commitment.

Another set of charges.

Another underwriting path.

Another policy that has to be monitored.

That’s the tradeoff.

When Might Two Separate JUMP Strategies Be Worth Evaluating?

It may be worth running the numbers when:

• Both spouses have legitimate permanent life insurance needs
• The household has sufficient long-term cash flow
• Both spouses are insurable under acceptable terms
• The couple wants multiple potential retirement-income sources
• Survivor planning is a major concern
• The household wants to evaluate separate death benefits
• Two policies still leave adequate liquidity outside the insurance contracts
• The strategy remains viable if future JUMPs are not approved

When Should You Be More Cautious?

If funding two policies strains household cash flow.

If one spouse has no meaningful permanent insurance need.

If the strategy requires every future JUMP to be approved.

If the household doesn’t have adequate emergency reserves.

If you’re giving up an employer match without comparing the economics.

If both policies are shown with identical assumptions even though the spouses have different ages or underwriting.

If the entire retirement plan relies on favorable indexed crediting.

If nobody has shown you the 6% maximum loan-rate stress test.

If nobody has modeled the first-death scenario.

The Bottom Line

Should both spouses use the IUL JUMP Strategy?

Don’t answer that by looking at one illustration and multiplying it by two.

Run each spouse separately.

Then combine them.

Two spouses mean two underwriting paths.

Two sets of policy economics.

Two future JUMP sequences.

Two potential death benefits.

And potentially two separate sources of retirement-income flexibility.

But the household also has to support two long-term insurance contracts.

So ask:

“What does one policy do for us?”

Then:

“What does the second policy add?”

Then:

“Does that improvement justify the additional funding, underwriting, costs, and complexity?”

That’s the comparison that matters.

Let the math do the talking.

How We Compare One JUMP Strategy vs. Two at FPP Financial

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

For couples, that means we don’t treat two people as one illustration.

We look at each spouse.

Age.

Health.

Income.

Insurance need.

Existing coverage.

Retirement assets.

Retirement timing.

Then we look at the household.

We can compare:

• No IUL strategy
• One spouse using the strategy
• The other spouse using the strategy
• Both spouses using separate strategies

Then we test the JUMP mechanics.

We look at client-funded dollars.

We look at Matching Indexed Participating Loan activity.

We look at current applicable loan costs.

We stress-test the contractual maximum loan rate.

We look at policy charges.

We look at projected indebtedness.

We look at projected net death benefits.

We remove future JUMPs.

We test weak crediting.

We test early retirement.

We test early death.

We test long life.

Then we compare household retirement income and survivor outcomes.

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 Whether One JUMP Strategy or Two Makes More Sense for Your Household?

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.

Those are modeled results, not guarantees.

For a married couple, we don’t simply duplicate those percentages.

We run each spouse.

Then we run the household.

Then we stress-test what happens when the two paths stop looking identical.

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

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

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

Show me exactly where the difference comes from.

Then show me what happens if one spouse’s JUMP path changes.

Let the math do the talking.

Schedule Your Tax-Free Retirement Strategy Meeting

Explore More

• IUL for High-Income Couples: Should Both Spouses Own a Policy?
• What Happens If You Don’t Qualify for Your Next IUL JUMP?
• What Happens to an IUL When the Insured Dies Earlier Than Expected?

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.

Each spouse’s insurance needs, insurability, underwriting classification, financial justification, policy design, funding capacity, retirement objectives, and policy economics are evaluated individually. Approval or favorable terms for one spouse do not guarantee approval, comparable terms, or future coverage increases for the other spouse.

Projected retirement income, policy values, and death benefits are not guaranteed unless specifically identified as guaranteed under the applicable insurance contract. Nonguaranteed illustrated values can vary materially from actual policy results.

Two separate indexed universal life policies do not automatically produce twice the retirement income, twice the cash value, twice the death benefit, or any particular household outcome. Each insurance contract has its own insured, underwriting, policy values, charges, loan provisions, death benefit, and actual performance.

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. Qualified tax and legal professionals should be consulted regarding individual circumstances.

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 under the applicable insurance contract 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.

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, or guaranteed lifetime income. Having multiple policies does not make any particular distribution level sustainable or guaranteed.

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, distributions, withdrawals, 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.

References to a 10% cap and 0% indexed-crediting floor describe the example strategy discussed in this article. Actual caps, participation rates, spreads, crediting methods, indexed strategies, and other nonguaranteed elements are governed by the applicable insurance contract and current declarations and may change where permitted by contract.

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 and retirement distributions can place additional pressure on policy values and durability.

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. Modeled results for one insured should not be assumed to apply to another insured.

Future JUMPs and associated death-benefit increases are subject to future underwriting and approval separately for each insured. Initial policy approval, a spouse’s approval, or 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 of one spouse to qualify for a future JUMP does not necessarily mean that spouse’s prior successful JUMPs or previously achieved matching-loan level automatically disappear, nor does it determine the other spouse’s future JUMP eligibility. Each policy is governed separately by its applicable contract and approval process.

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, or S&P 500 performance. Using separate policies for two spouses does not double, compound, or otherwise increase the percentage claim.

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. Using separate policies for two spouses does not double or otherwise increase the percentage claim. Each spouse should be modeled independently before household results are combined.

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, changing retirement-plan contributions, taking policy loans, accessing policy values, or implementing any retirement-income, insurance, survivor, or legacy strategy discussed here.