Can an IUL Provide Retirement Income for the Rest of Your Life?

“Can this actually pay me for the rest of my life?”

That’s one of the biggest questions people ask when they see an indexed universal life policy being used as part of a retirement strategy.

And there’s an important distinction to make right away.

An IUL can be modeled to provide retirement income through advanced ages.

But that does not automatically mean the retirement income is contractually guaranteed for the rest of your life.

Those are two very different statements.

If an illustration shows $100,000 a year from age 65 through age 95, that’s a 30-year projection.

It tells you what the policy is projected to do under the assumptions being used.

It doesn’t tell you that $100,000 is guaranteed to arrive every year regardless of what happens inside the policy.

So the question I would ask isn’t simply:

“Does the illustration show income for life?”

I’d ask:

“What has to remain true for this income to keep going?”

Projected Lifetime Income and Guaranteed Lifetime Income Are Not the Same Thing

This distinction matters.

Some financial products may contain contractual income guarantees subject to their specific terms and conditions.

An IUL retirement-income projection commonly relies on policy values, withdrawals and policy loans.

Those values are affected by the actual performance and mechanics of the policy.

So when someone says:

“This gives you income for life,”

I want to see what they mean.

Does the policy illustration project income through age 90?

Age 95?

Age 100?

Is there an applicable contractual guarantee supporting that specific distribution?

Or is the income based on nonguaranteed illustrated policy values?

Those aren’t small details.

What Actually Supports the Retirement Income?

For an IUL retirement strategy, the projected income can be affected by:

• The amount of policy value accumulated before retirement
• The age retirement distributions begin
• The amount accessed each year
• Indexed-crediting results
• Cost of insurance
• Administrative and other policy charges
• Policy-loan provisions
• Applicable policy-loan rates
• Outstanding policy indebtedness
• Death-benefit structure
• Longevity
• How the policy is managed after retirement begins

If you’re trying to create income for the rest of your life, every one of those variables deserves attention.

The First Few Years Are the Easy Part to Show

Imagine retiring at 65.

An illustration shows:

$100,000 per year.

Age 65 looks good.

Age 66 looks good.

Age 67 looks good.

That’s not enough.

If you’re 65 today, your retirement plan may need to function for another 25 or 30 years.

Possibly longer.

I care much more about what the policy looks like after decades of distributions.

Show Me the Policy at 75

Ten years into retirement, what does the policy look like?

How much income has been accessed?

How much policy value remains?

What is the outstanding indebtedness?

What is the net death benefit?

Is the policy still comfortably projected in force?

Then Show Me 85

Now you’ve potentially taken retirement distributions for 20 years.

This is where the cumulative effects become more important.

Twenty years of policy charges.

Twenty years of distributions.

Potentially decades of policy-loan activity.

Strong crediting years.

Weak crediting years.

Maybe several 0% indexed-crediting years.

That’s a much more meaningful test.

Then Keep Going

If the strategy is being presented as something designed to potentially support you throughout retirement, don’t stop the analysis just because the illustration still looks attractive at 85.

Run it farther.

What happens if you live longer than you expected?

That’s the longevity question.

Living Longer Is a Good Problem Until the Money Doesn’t Last

Most people don’t know exactly how long retirement will be.

You may plan around age 85.

Then live far beyond it.

The problem isn’t living longer.

The problem is building a retirement-income strategy that quietly assumed you wouldn’t.

That’s why lifetime-income planning should include advanced ages from the beginning.

Retirement Age Changes the Lifetime-Income Math

Suppose two people both need income through age 95.

One begins at 60.

The other begins at 70.

The person starting at 60 may need approximately:

35 years of retirement distributions.

The person starting at 70 may need approximately:

25 years.

That’s a decade of additional distributions.

It also means the person retiring earlier had fewer years for the policy to accumulate before income started.

That’s Why “I Want to Retire Early” Changes More Than the Start Date

It changes both sides of the equation.

Less accumulation time.

More distribution years.

If you change your retirement date, rerun the policy.

The Amount You Take Matters Just as Much

Consider a hypothetical policy value of:

$1,000,000.

A first-year distribution equal to 6% would be:

$60,000.

At 8%:

$80,000.

At 10%:

$100,000.

At 12%:

$120,000.

It’s easy to see why people focus on the biggest number.

But the biggest first-year number isn’t automatically the best lifetime-income strategy.

The Question Is What Happens After Year One

If you take $120,000, what happens to the policy next year?

What happens ten years later?

What happens after several weak crediting periods?

What happens if the loan rate rises?

What happens after 30 years?

That’s how you test lifetime income.

The IUL JUMP Strategy Changes the Accumulation Side of the Equation

The IUL JUMP Strategy uses a Matching Indexed Participating Loan during the accumulation strategy we’re discussing.

The matching amount is created as policy-loan activity.

The proceeds are redeployed into the same policy as additional funding.

Under the applicable mechanics being modeled, associated loan-funded policy value can continue participating in the applicable indexed-crediting strategy while the corresponding policy indebtedness carries its applicable loan cost.

The objective is to change the accumulation economics before retirement.

If more policy value is successfully built under the modeled strategy, that can change the amount of projected retirement income the policy may potentially support later.

But the Matching Loan Is Still Debt Against the Policy

Don’t skip this part.

The Matching Indexed Participating Loan isn’t free money.

It isn’t a carrier contribution.

It isn’t a bonus that can be counted while ignoring the other side of the transaction.

It creates policy indebtedness.

That indebtedness and its applicable loan cost have to remain in the lifetime-income projection.

Think of the JUMP Strategy as Two Economic Buckets

The first bucket is the client’s money.

Using our example:

$10,000 per year.

The second bucket is the accumulated Matching Indexed Participating Loan money that has been redeployed into the policy.

Under the example mechanics, both buckets can participate in the same applicable indexed-crediting strategy.

But the loan-funded bucket carries the applicable policy-loan cost.

That’s the difference.

The Loan Cost Matters Over a Lifetime

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 you’re modeling a policy that may need to function for decades, I wouldn’t evaluate it only at the current 5% rate.

I’d run the maximum 6% rate too.

Why?

Because small differences become much more important when you stretch the projection over decades.

And the lifetime-income question is specifically about decades.

Positive Arbitrage Can Help

Suppose the applicable indexed-crediting result is:

8%.

And the applicable policy-loan cost is:

5%.

The simplified relationship is:

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

That favorable relationship can help the modeled economics associated with participating-loan funding.

But that doesn’t mean the entire policy earned 3% net.

And it doesn’t guarantee that relationship continues.

Negative Arbitrage Can Hurt

Now suppose the applicable indexed-crediting result is:

4%.

With the same 5% applicable loan cost:

4% – 5% = an unfavorable 1-percentage-point relationship.

If that happens while you’re also accessing substantial retirement income, the policy faces more pressure.

What About a 0% Year?

A 0% indexed-crediting result with a 5% applicable loan cost creates a simplified unfavorable:

5-percentage-point relationship.

That does not mean the entire policy automatically loses 5%.

It describes the simplified relationship between the applicable crediting result and loan cost.

Policy charges and distributions also need to be included.

A 0% Floor Does Not Guarantee Your Policy Value Can’t Decline

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

It does not freeze the entire policy.

Cost of insurance can continue.

Administrative charges can continue.

Applicable loan costs can continue.

Retirement distributions can continue.

That’s why a lifetime-income projection needs to survive weak crediting periods.

One Weak Year Is Not the Test

I want to see several.

Not because several weak years are guaranteed.

Because we’re trying to find out what the strategy can withstand.

Run multiple 0% crediting periods.

Keep the loan costs.

Keep the policy charges.

Keep the retirement income coming out.

Then see what happens.

This Is Where “Income for Life” Has to Prove Itself

If the policy still looks healthy under tougher assumptions, that’s useful information.

If the income has to be reduced, that’s useful too.

If the policy starts running into trouble at advanced ages, you want to know that before retirement.

Not after.

How Does the Historical 6.87% Example Fit Into the JUMP Model?

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

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

The example applied a:

10% cap

and:

0% indexed-crediting floor.

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

Positive annual price changes above 10% were limited to 10%.

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

6.87%.

At the Current 5% Applicable Loan Rate, the Simplified Modeled Spread Was 1.87 Percentage Points

The simplified calculation was:

6.87% – 5.00% = 1.87 percentage points.

That favorable modeled relationship has been part of the JUMP analysis.

It is not guaranteed.

The historical 6.87% figure is not a guaranteed future indexed-crediting rate.

And a positive spread should never be assumed for every year of a lifetime retirement projection.

The JUMP Model Has Also Produced Higher Modeled Effective Results

Under assumptions used in one JUMP model, the base indexed-crediting assumption and the positive-arbitrage effect attributed to successive Matching Indexed Participating Loans produced modeled effective results of 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 modeled effective results under assumptions used in that analysis, before accounting for applicable policy charges and other factors.

Future JUMPs Also Affect the Lifetime-Income Projection

In the example progression, planned JUMPs occur in policy Years:

3, 5, 7, 9 and 11.

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

Future JUMPs are not guaranteed when the original policy is issued.

Health can matter.

Income and employment can matter.

Existing insurance can matter.

Driving history can matter.

Occupation can matter.

Hazardous job duties and risky hobbies can matter.

What Happens If You Miss a Future JUMP?

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

Suppose you’ve already reached a $30,000 Matching Indexed Participating Loan level.

If you don’t qualify for the next planned JUMP, the prior achieved matching level does not automatically disappear under the mechanics described.

You may be able to reapply at a later policy anniversary if circumstances improve, subject to actual policy rules and approval.

But the lifetime-income projection should be rerun.

Run the Lifetime-Income Scenario With No More JUMPs

This is a useful test.

If the original projection assumes several future JUMPs, remove them.

Then ask:

“What happens to my projected retirement income now?”

And:

“How far does the policy remain projected to carry it?”

If the strategy only looks attractive when every future assumption goes perfectly, that’s something you should know.

Policy Charges Don’t Retire When You Do

This is easy to overlook.

You may stop working.

You may stop contributing.

But the policy can continue having applicable:

• Cost of insurance
• Administrative charges
• Rider charges
• Loan costs
• Other contractual expenses

Those charges matter when you’re asking a policy to provide income for decades.

Cost of Insurance Can Become More Important at Older Ages

The applicable cost-of-insurance rate can increase with attained age under the policy’s contractual structure.

The actual dollar charge also reflects factors such as the applicable rate and the policy’s net amount at risk.

That’s another reason a policy that looks strong at 65 should still be evaluated much later.

Don’t Assume the Same Retirement Distribution Has to Continue Forever

Suppose you begin retirement taking:

$100,000 per year.

Then the policy experiences weaker results than originally projected.

You have choices to evaluate.

Maybe the current distribution remains supportable in the updated projection.

Maybe reducing it improves long-term policy durability.

Maybe another retirement asset can temporarily provide part of the income.

The important thing is to update the math.

Flexibility Can Matter More Than a Perfectly Flat Income Line

Real retirement spending isn’t perfectly flat anyway.

You may spend heavily during your first decade of retirement.

You travel.

You remodel the house.

You buy vehicles.

Later, spending may slow.

Then healthcare expenses may rise.

Your income strategy can be modeled around actual spending goals rather than pretending every year will look identical.

What If You Need a Large Amount Unexpectedly?

Maybe you’re 74 and need another:

$100,000.

That doesn’t automatically mean the strategy fails.

But don’t take the money and pretend nothing changed.

Update the projection.

See what happens to future values.

See what happens to outstanding indebtedness.

See what happens to later retirement income.

Lifetime Income Requires Lifetime Monitoring

A policy you buy at 50 could still be part of your financial life at 85 or 90.

That’s a long time.

The policy shouldn’t disappear into a filing cabinet for 30 years.

Review the numbers.

Review the loan balance.

Review the current applicable loan provisions.

Review the policy values.

Review the retirement distributions.

Review whether the strategy is still tracking toward the objective.

Policy Lapse Is the Scenario You Cannot Ignore

If policy values become insufficient to support policy charges and indebtedness under the applicable contract, lapse risk can become a serious concern.

That’s especially important when significant policy loans are outstanding.

A policy lapse or surrender with gain and outstanding indebtedness can potentially create taxable income under applicable tax rules.

So “income for life” requires more than getting money out.

The policy itself needs to remain properly maintained.

That Tax Risk Can Become More Painful Later in Life

Imagine being 82.

You’ve been accessing policy values for years.

You have substantial outstanding indebtedness.

Then the policy gets into trouble.

That’s not when you want to discover that the original retirement-income assumptions were too aggressive.

The stress testing needs to happen earlier.

What About the Potential Tax Treatment of IUL Retirement Access?

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.

That’s one reason an IUL can be evaluated as a retirement-income strategy.

But don’t reduce the conversation to:

“tax-free income for life.”

That’s too broad.

Basis matters.

MEC status matters.

Policy status matters.

Outstanding indebtedness matters.

Lapse and surrender matter.

Now Put the Up-to-300% Comparison Through the Lifetime Test

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’s a significant modeled difference.

But if someone shows you the 300% number, don’t stop there.

Ask:

“How long is that projected income being paid?”

Lifetime Income Changes the Meaning of the Comparison

Suppose one strategy shows more income during the first ten years.

What happens during the next ten?

And the ten after that?

If we’re talking about retirement income, duration matters almost as much as the amount.

Then Stress-Test the 300% Difference

Lower the indexed-crediting assumption.

Use the contractual maximum 6% applicable loan rate.

Add multiple 0% crediting periods.

Include all applicable policy charges.

Remove future JUMPs.

Start retirement earlier.

Extend retirement through advanced ages.

Then compare the retirement income again.

The 300% Isn’t the Sales Pitch. It’s the Question.

Don’t buy a strategy because somebody showed you a huge percentage.

Make them show you the assumptions underneath it.

Make them show you what happens when those assumptions change.

Make them show you the later years.

Show me exactly where the difference comes from.

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.

That result is also model-specific.

It is not a promise that every JUMP Strategy will provide 40% more income than every other IUL.

And a higher projected income number still has to pass the lifetime test.

Here’s the Lifetime-Income Stress Test I Would Want

Start with the baseline projection.

Then run:

1. The planned retirement age
2. Retirement five years earlier
3. The planned annual distribution
4. A higher annual distribution
5. A lower annual distribution
6. The current applicable 5% loan rate
7. The contractual maximum 6% loan rate
8. Lower indexed-crediting assumptions
9. Multiple 0% crediting periods
10. All planned future JUMPs
11. No additional future JUMPs
12. Applicable policy charges
13. Longer-than-expected retirement

Then look at the policy year by year.

What Should You Look for in the Later Years?

I want to see:

• Projected retirement income
• Policy value
• Cash surrender value
• Outstanding policy indebtedness
• Applicable loan cost
• Policy charges
• Net death benefit
• Whether the policy remains projected in force

Don’t let a lifetime-income conversation hide the condition of the policy underneath the income stream.

There’s Also a Legacy Tradeoff

If you’re accessing policy values throughout retirement, outstanding policy indebtedness generally reduces the net death benefit payable under the contract.

Someone who wants to maximize retirement income may make different choices from someone who wants to preserve a larger death benefit for children or grandchildren.

That’s a real tradeoff.

The strategy should reflect which objective matters more to you.

“Income for Life” Sounds Great Until You Ask What Life Might Actually Look Like

At 65, you may picture travel.

At 75, maybe it’s grandchildren.

At 85, maintaining independence may become much more important.

You may need help around the house.

You may have larger healthcare expenses.

You may care less about maximizing income and more about knowing you still have options.

That’s why the later years matter so much.

The Fear Isn’t Really That You’ll Live Too Long

The fear is that your money won’t.

It’s waking up at 2:00 in the morning and thinking:

“We’re fine now, but what happens if we’re both still here 25 years from now?”

Or:

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

That’s the question the retirement projection needs to address.

Because You Don’t Want Longevity to Cost You Your Independence

You worked for decades so you could make your own decisions.

You don’t want to reach your 80s and realize the plan assumed your children would step in if something went wrong.

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

“We should be able to handle this ourselves.”

Then test the strategy far enough into the future that you can see what those later years might look like.

The Bottom Line

Can an IUL provide retirement income for the rest of your life?

An IUL can be designed and modeled to potentially provide retirement income through advanced ages.

But projected lifetime income is not automatically the same thing as contractually guaranteed lifetime income.

The income is affected by the actual policy.

How much value was accumulated.

When distributions begin.

How much you access.

Indexed-crediting results.

Policy charges.

Policy-loan costs.

Outstanding indebtedness.

Longevity.

And how the policy is managed over time.

So if somebody tells you an IUL can provide income for life, don’t argue with the statement and don’t blindly believe it.

Ask them to prove what they mean.

Show me the income.

Show me the policy values.

Show me the loans.

Show me the charges.

Show me the later years.

Then show me what happens when the assumptions get worse.

How We Test Lifetime Retirement Income at FPP Financial

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

We don’t stop at the first retirement-income number.

We’ll run the policy forward.

We’ll look at the projected income.

We’ll look at policy values.

We’ll look at outstanding policy indebtedness.

We’ll look at net death benefit.

We’ll model the current applicable 5% loan rate.

We’ll stress-test the contractual maximum 6% loan rate.

We’ll test lower indexed crediting.

We’ll test multiple 0% crediting periods.

We’ll include applicable policy charges.

We’ll test different retirement ages.

We’ll test different distribution levels.

We’ll test future JUMPs.

We’ll test no future JUMPs.

We’ll extend the analysis through advanced ages.

Then we’ll see whether the projected retirement-income strategy still holds together when time becomes part of the test.

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

Want to See Whether Your IUL Retirement Income Can Hold Up for the Long Haul?

That’s the calculation worth running before you rely on the income.

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.

And a big projected income number means very little if you haven’t tested how long it can continue.

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.

Let the math do the talking.

Schedule Your Tax-Free Retirement Strategy Meeting

Explore More

• How Long Can You Take Retirement Income From an IUL?
• Can You Really Take 10% or 12% a Year From an IUL in Retirement?
• How to Stress-Test an IUL Before You Use It for Retirement

Disclosure

This material is for educational purposes only and is not intended as individualized investment, securities, tax, legal, underwriting, 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, or direct investment in a market index.

References to “income for life,” “lifetime retirement income,” or similar language in this article refer to retirement income that may be modeled to continue through advanced ages under specified assumptions. Such projections should not be interpreted as contractually guaranteed lifetime income unless a specific guarantee is expressly provided under the applicable insurance contract or rider and all applicable requirements are satisfied.

Projected retirement income from an indexed universal life policy is not guaranteed unless specifically identified as guaranteed under the applicable insurance contract. Nonguaranteed illustrated values can vary materially from actual policy results.

There is no universal or guaranteed number of years that retirement income can be accessed from an indexed universal life policy. Projected income duration is affected by policy design, premiums, policy values, indexed-crediting results, policy charges, cost of insurance, loan provisions, loan rates, outstanding indebtedness, withdrawals, retirement distributions, retirement timing, longevity, death-benefit objectives, policy management, and other factors.

References to 10% or 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 for life or any particular number of years.

Simple examples that multiply hypothetical policy value by 6%, 8%, 10%, or 12% are arithmetic illustrations only. They do not establish the amount that can sustainably be accessed from an actual policy.

Policy loans create indebtedness under the applicable insurance contract and generally accrue applicable loan charges. Loan provisions, loan rates, repayment provisions, treatment of values associated with outstanding loans, and treatment of unpaid loan charges vary by insurance contract. Actual policy 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.

References to loan-funded policy value continuing to participate in an applicable indexed-crediting strategy describe the strategy mechanics being modeled and should be verified against the applicable current approved illustration and actual insurance contract. Policy-specific loan and crediting provisions govern actual results.

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.

Simplified examples comparing indexed crediting with an applicable policy-loan cost illustrate only the economic relationship between the two rates. They do not represent the policy’s complete return, guaranteed profit or loss, or exact dollar effect on policy values. Actual results are affected by policy values, outstanding indebtedness, timing, crediting mechanics, cost of insurance, administrative expenses, other policy charges, withdrawals, distributions, and other contractual factors.

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 long-term policy durability.

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, retirement 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.

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, 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 retirement-income projections should be updated when future JUMP assumptions change.

Policy loans generally can reduce policy values and death benefits and increase lapse risk. Outstanding policy indebtedness generally reduces the net death benefit payable under the insurance contract. A policy that lapses or is surrendered with gain and outstanding indebtedness may create taxable income under applicable tax rules.

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.

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, guaranteed income duration, or S&P 500 performance. Funding, taxes, market assumptions, policy-loan mechanics, loan rates, indexed-crediting results, policy charges, future JUMPs, retirement timing, distributions, longevity, and other assumptions can materially alter projected results.

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. Funding, indexed-crediting assumptions, policy charges, loan provisions, loan costs, future JUMPs, death-benefit structure, retirement distributions, and longevity can materially alter the comparison.

A larger modeled retirement-income amount does not by itself establish that the income is guaranteed for life or that it will continue longer than income from another strategy. Comparisons should evaluate projected income amount, projected duration, policy condition, taxes, costs, and relevant guarantees using clearly stated assumptions appropriate to each strategy.

Policy-specific guarantees, nonguaranteed elements, underwriting requirements, death-benefit options, MEC limits, cost-of-insurance provisions, policy charges, surrender provisions, loan provisions, loan rates, caps, participation rates, spreads, crediting methods, lapse provisions, repayment options, and distribution mechanics should be verified against current approved illustrations and the actual insurance contract.

FPP Financial does not provide tax or legal advice. Consult qualified tax, legal, and financial professionals regarding your individual circumstances before purchasing or modifying life insurance, taking policy loans, accessing policy values, or implementing any retirement-income strategy discussed here.