Should You Maximize IUL Retirement Income or Preserve More Death Benefit?

You’ve spent years building the policy.

Retirement finally arrives.

The illustration says you may be able to access a substantial amount of money each year.

Your first thought might be:

“If the policy can give me $100,000 a year, why wouldn’t I take $100,000?”

Fair question.

But there’s another number on the illustration that matters too.

The death benefit.

And once policy loans and retirement distributions enter the picture, the number your beneficiaries may ultimately receive can be very different from the headline death benefit you saw when the policy was originally issued.

That creates a real retirement decision:

Do you push the policy for more retirement income now, or take less and preserve more projected net death benefit and flexibility for later?

There Isn’t One Number You Should Automatically Maximize

A lot of retirement planning gets reduced to one scoreboard.

Highest account value.

Highest illustrated income.

Largest death benefit.

Lowest tax bill.

But retirement doesn’t work that way.

You may want several things at the same time:

• Enough income to enjoy retirement
• Enough flexibility for unexpected expenses
• A policy that remains durable if you live a long time
• A meaningful death benefit for your spouse or children
• Less fear around running out of money

Those goals can compete with one another.

The Question Isn’t “How Much Can I Take?”

The better question is:

“How much should I take for the outcome I’m trying to create?”

Those are not the same question.

A policy may illustrate a certain retirement distribution under a set of assumptions.

That doesn’t mean the illustrated amount automatically becomes your annual spending target.

Imagine Two Retirees With the Same Policy

Both are 65.

Both have the same policy values.

Both have the same projected death benefit.

Both have the same Social Security income.

But they want completely different things.

Retiree A says:

“My kids are doing fine. I want to use what I built.”

Retiree B says:

“I want to enjoy retirement, but leaving $1 million to my family is extremely important to me.”

The same distribution strategy may not make sense for both people.

Retiree A May Prioritize Current Income

That person may be comfortable accepting a lower projected net death benefit in exchange for greater access to policy values during retirement.

But even then, the policy still needs to remain durable.

Taking more money isn’t useful if the strategy creates unacceptable lapse risk later.

Retiree B Has Two Targets

Retiree B needs to solve for:

Target 1: Retirement income.

And:

Target 2: Projected net death benefit.

Now the model has a tighter job.

The question becomes:

“How much can I reasonably access while still keeping the legacy target intact under the assumptions we’re testing?”

Why Does Taking More Income Affect the Death Benefit?

Because retirement access from an IUL may involve withdrawals and policy loans.

Policy loans create indebtedness.

Loan charges matter.

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

So if you’re using policy loans heavily during retirement, you need to watch two numbers:

Outstanding policy indebtedness.

And:

Projected net death benefit.

Gross Death Benefit Can Be Misleading

Suppose an illustration shows a gross death benefit of:

$1,500,000.

Someone could look at that and think:

“Great. My kids get $1.5 million.”

Not necessarily.

If there is substantial outstanding policy indebtedness at death, that generally reduces the amount payable to beneficiaries under the contract.

For retirement planning, I want to see the projected net death benefit after policy indebtedness.

Now Add Longevity

Suppose you begin taking retirement income at 65.

If you die at 72, the policy has supported seven years of retirement distributions.

If you live to 97, it has potentially supported 32 years.

Those are completely different stress tests.

The longer retirement lasts, the longer the policy may experience:

• Retirement distributions
• Policy-loan activity
• Loan costs
• Insurance costs
• Administrative charges
• Good indexed-crediting years
• Weak indexed-crediting years

That’s why maximizing income based on a short or favorable projection can be dangerous.

The First Tradeoff to Model Is Simple

Run the policy three ways.

Scenario A: Higher retirement income.

Scenario B: Moderate retirement income.

Scenario C: Lower retirement income with a stronger legacy target.

Then compare:

• Projected annual income
• Projected cash value
• Projected policy indebtedness
• Projected net death benefit
• Policy durability

Now you can actually see what you’re trading.

Here’s a Simple Hypothetical

Suppose three models show annual retirement distributions of:

$120,000

$90,000

and:

$60,000.

The $120,000 model may look exciting.

But what if it produces significantly more projected policy indebtedness and substantially less net death benefit later?

What if the $90,000 model still supports your lifestyle while leaving considerably more projected flexibility?

What if you only need $70,000?

Then maximizing the illustrated income may solve a problem you don’t actually have.

This Is Where People Can Get Tricked by a Big Income Number

More isn’t automatically better.

If you don’t need the extra $30,000 or $40,000 each year, taking it simply because the illustration says you can may change the long-term policy economics for no meaningful lifestyle benefit.

That’s why your spending target should come before the policy distribution target.

Now Bring in the IUL JUMP Strategy

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

Let’s use the standard example where the client contributes:

$10,000 per year.

The Example JUMP Funding Progression

The Additional Funding Is Not Free Money

In Year 11 of the example, the client is still contributing:

$10,000 out of pocket.

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

That amount is created through policy loans.

It creates policy indebtedness.

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

Why Does This Matter When You’re Choosing Between Income and Death Benefit?

Because the JUMP Strategy isn’t simply accumulating policy value.

It also has loan economics that need to be accounted for.

When retirement begins, the existing policy indebtedness and future retirement-access strategy both matter.

You can’t evaluate the death benefit without looking at the loans.

Think of the JUMP Strategy as Two Economic Buckets

Bucket 1: Value associated with the client’s own contributions.

Bucket 2: Value associated with accumulated Matching Indexed Participating Loan-funded amounts.

Under the example, both participate under the same applicable indexed-crediting strategy with a potential 10% cap and 0% indexed-crediting floor.

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

The Current Applicable Loan Rate Is 5%

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%.

That one percentage point can matter over a long retirement.

So if you’re deciding how aggressively to access the policy, run both.

Don’t Maximize Income Using Only the 5% Loan Assumption

Suppose the highest illustrated retirement distribution works beautifully at the current applicable 5% loan rate.

What happens at 6%?

Does projected net death benefit fall substantially?

Does policy indebtedness accelerate?

Does the policy become more fragile at age 90 or 95?

Those are the questions I’d want answered before calling the higher distribution sustainable.

Positive Arbitrage Can Improve the Modeled Economics

Suppose applicable indexed crediting is:

8%.

And the applicable loan cost is:

5%.

The simplified economic relationship is:

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

That’s a simplified example of positive arbitrage.

But What Happens When That Relationship Reverses?

Suppose applicable indexed crediting is:

0%.

And the applicable loan cost remains:

5%.

Now the simplified relationship becomes:

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

If you’re also taking a large retirement distribution that year, you’re asking more from the policy during an unfavorable period.

That can matter.

This Is Why Flexible Income Can Be More Valuable Than Maximum Income

Imagine the policy has a weak year.

You planned to access $100,000.

But your pension, Social Security, cash reserves, and other assets mean you could comfortably take $70,000 instead.

That flexibility may help reduce pressure on the policy.

It doesn’t guarantee a better outcome.

But it gives you another lever to pull.

The 0% Floor Doesn’t Mean the Policy Is Frozen at Zero

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

It doesn’t stop:

• Policy charges
• Cost of insurance
• Applicable loan costs
• Withdrawals
• Retirement distributions

Overall policy value can still decline.

That’s especially relevant if you’re trying to preserve a meaningful death benefit.

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:

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 Ask a More Important Question

Even if the model produces strong accumulation, what are you going to do with it?

If you immediately push retirement distributions to the highest illustrated level, you’re choosing one objective:

More current income.

If you intentionally take less, you may be prioritizing:

• More projected net death benefit
• More policy-value cushion
• More flexibility for later years
• Potentially greater tolerance for weak crediting

Neither objective should be chosen automatically.

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 is not guaranteed lifetime income.

It does not mean every retiree should take 12%.

And it does not mean taking approximately 12% will preserve a specific death benefit.

If You Only Need 8%, Why Automatically Take 12%?

That’s exactly the kind of question the model should answer.

Suppose your pension and Social Security already cover most of your expenses.

You may only need the IUL for travel, gifts, and discretionary spending.

Maybe the higher illustrated distribution adds no meaningful improvement to your life.

Preserving more flexibility could be more valuable.

But Don’t Become Afraid to Use the Policy Either

There’s another extreme.

Some people spend decades building wealth and then become terrified to touch it.

They’ll skip trips.

They’ll delay home improvements.

They’ll worry about every purchase.

All because they want to preserve the biggest possible inheritance.

If that’s not actually what you want, don’t let a death-benefit number control your retirement.

Your Children May Not Want You Living Smaller Just to Leave Them More

That’s a family conversation worth having.

Maybe your children would rather see you travel.

Maybe they’d rather see you make your home safer.

Maybe they’d rather see you spend money on healthcare and comfort.

Legacy isn’t only the check someone receives after you die.

But if leaving a specific financial legacy matters to you, put a number on it and model it.

Try Setting a Death-Benefit Floor

For example:

“I want to maximize useful retirement income while keeping at least $500,000 of projected net death benefit through age 95 under our stress-tested assumptions.”

That’s a hypothetical target.

But it’s measurable.

Now the policy isn’t trying to maximize one number.

It’s trying to satisfy two constraints.

Then Ask How Much Income Fits Above That Floor

Maybe it’s $60,000 per year.

Maybe it’s $90,000.

Maybe it’s more.

Maybe it’s less.

The point is that the distribution comes out of the objective.

The objective doesn’t come out of the illustration.

Future JUMPs Matter Here Too

The standard JUMP 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 JUMPs are not guaranteed when the original policy is issued.

Don’t Preserve a Future Death Benefit That Hasn’t Been Approved Yet

If the projection assumes future death-benefit increases tied to future JUMPs, those future increases are still subject to underwriting.

Health can change.

Income can change.

Employment can change.

Existing insurance can matter.

Driving history can matter.

Occupation and hazardous duties can matter.

Risky hobbies can matter.

Other underwriting factors can matter.

So stress-test the retirement-income and death-benefit tradeoff with:

No additional future JUMPs.

A Missed JUMP Doesn’t Necessarily Mean Starting Over

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 later, subject to applicable rules and approval.

But the retirement projection and death-benefit projection need to be updated.

Now Let’s Bring in 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.

That’s highly relevant to a post about maximizing retirement income.

But don’t stop at the big number.

300% More Projected Retirement Income Does Not Mean You Should Take the Maximum

It doesn’t mean 300% more return.

It doesn’t mean 300% more cash value.

It doesn’t mean 300% more death benefit.

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

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

And even if your personal model produces substantially more projected retirement income, you still have to decide how much of that projected capacity you actually want to use.

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

If you see a large modeled difference, ask:

“Show me exactly where the difference comes from.”

Then ask:

“What happens if I take less?”

And:

“How much more projected net death benefit does that preserve?”

That’s a much more useful conversation.

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’s also a retirement-income comparison.

It does not mean approximately 40% more death benefit.

If legacy matters, compare both the projected retirement income and projected net death benefit under each structure.

Here’s the Stress Test I’d Want Before Maximizing IUL Income

1. Define the retirement-income amount you actually need.
2. Define the retirement-income amount you would like.
3. Define the minimum legacy target, if one exists.
4. Review Social Security and pension income.
5. Review Traditional retirement assets.
6. Review Roth assets.
7. Review taxable investments and cash.
8. Review the permanent insurance need.
9. Review projected policy values.
10. Review projected policy charges.
11. Review projected policy indebtedness.
12. Review projected net death benefit.
13. Run a higher IUL distribution.
14. Run a moderate distribution.
15. Run a lower distribution.
16. Run the current applicable 5% loan rate.
17. Run the contractual maximum 6% loan rate.
18. Lower the indexed-crediting assumption.
19. Add several 0% indexed-crediting years.
20. Run no additional future JUMPs.
21. Model retirement five years early.
22. Model higher healthcare costs.
23. Model an unexpected large expense.
24. Model death at age 75.
25. Model death at age 85.
26. Model death at age 95.
27. Model survival beyond age 95.
28. Compare net death benefit in every scenario.
29. Compare policy durability.
30. Choose the distribution that fits the actual goal.

What Would Make Me Nervous?

A retirement-income strategy that only works at the highest illustrated crediting assumption.

A plan that only works with the current applicable 5% loan rate.

A plan that assumes every future JUMP gets approved.

A plan that ignores policy indebtedness.

A plan that shows gross death benefit but not net death benefit.

A plan that stops at age 85 when you could live to 95.

A plan that treats approximately 12% as a guaranteed safe withdrawal rate.

A plan that never shows what happens after several weak crediting years.

Those aren’t small details.

They’re the retirement math.

What Would Give the Policy More Room?

Potentially:

• Taking less income in years when you don’t need as much
• Reducing distributions after unfavorable policy performance
• Using other retirement assets strategically
• Monitoring policy indebtedness
• Reviewing policy performance regularly
• Maintaining adequate liquidity outside the policy
• Keeping the legacy target visible
• Re-running the retirement model as circumstances change

None of those guarantee policy success.

They create options.

And Options Matter More as You Get Older

At 65, changing your retirement strategy can be uncomfortable.

At 85, it can be much harder.

That’s the fear sitting underneath this decision.

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

You don’t want to discover late in life that you took too much too early.

You also don’t want to reach 90 with far more money than you needed after spending 25 years afraid to enjoy it.

Independence Is Usually the Real Goal

You want enough income to live the way you planned.

You want enough cushion to handle surprises.

You want your spouse protected.

You may want something left for your children.

But above all, you don’t want to become dependent on them.

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

“We should be able to handle this ourselves.”

That means the retirement-income target can’t be separated from long-term durability.

When Might Taking More IUL Income Make Sense?

A higher distribution may deserve consideration when:

• You genuinely need or want the additional retirement income
• Legacy is a lower priority
• The policy remains durable under reasonable stress testing
• Projected policy indebtedness remains manageable under the assumptions being tested
• The projected net death benefit remains acceptable to you
• You have flexibility to reduce distributions later if needed

When Might Preserving More Death Benefit Make Sense?

A lower distribution may deserve consideration when:

• Leaving money to your spouse or children is a major objective
• You already have enough income from other sources
• You want a larger policy-value cushion
• You want more room for weak crediting years
• You expect a long retirement
• You want to reduce pressure from policy indebtedness
• The extra illustrated income would not materially improve your lifestyle

You Can Change the Balance Over Time

This doesn’t have to be a one-time decision made at 65 and never revisited.

Your spending may change.

Your health may change.

Your other investments may change.

Your family may change.

Your legacy goal may change.

The policy’s actual performance will also become known one year at a time.

That means the distribution strategy should be reviewed, not put on autopilot.

The Bottom Line

Should you maximize IUL retirement income or preserve more death benefit?

Don’t maximize either number blindly.

Start with what you actually want retirement to accomplish.

If the goal is more spendable income, model it.

If the goal is a meaningful legacy, put a number on it.

If you want both, make the policy prove both.

Then stress-test the result.

At 5% loan cost.

At 6%.

With weak crediting.

With no future JUMPs.

At age 85.

At age 95.

And beyond.

The highest illustrated income isn’t automatically the right income.

The largest illustrated death benefit isn’t automatically the right legacy.

The right balance is the one that fits the life you’re actually trying to fund.

Let the math do the talking.

How We Compare Retirement Income and Death Benefit at FPP Financial

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

We start with your retirement-income target.

Then your legacy target.

Your Social Security.

Your pension, if applicable.

Your Traditional retirement accounts.

Your Roth assets.

Your taxable investments.

Your cash.

Your debt.

Your insurance need.

Your retirement age.

Then we model the policy.

We look at client-funded dollars.

We look at Matching Indexed Participating Loan mechanics.

We look at policy values.

We look at policy charges.

We look at policy indebtedness.

We look at projected net death benefit.

Then we change the retirement-income amount.

Higher.

Moderate.

Lower.

We run the current applicable 5% loan rate.

We stress-test the contractual maximum 6% rate.

We add weak and 0% indexed-crediting periods.

We remove future JUMPs.

We extend the model through age 95 and beyond.

Then you can see the tradeoff instead of guessing at it.

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 Your Own Income-vs.-Death-Benefit Tradeoff?

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.

Neither percentage tells you how much income you personally should take.

Neither tells you how much net death benefit will remain.

That’s why we model both.

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 I take more, and what happens if I take less.

Let the math do the talking.

Schedule Your Tax-Free Retirement Strategy Meeting

Explore More

• Can an IUL Help With Legacy Planning While Providing Retirement Income?
• How Much Retirement Income Can an IUL Produce?
• What Happens to IUL Policy Loans When You Die?

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.

Retirement-income needs, legacy objectives, insurance needs, beneficiary circumstances, policy funding, underwriting, retirement timing, and appropriate policy design vary by individual. Any dollar amounts, distribution levels, death benefits, ages, or legacy targets used in this article are hypothetical examples unless specifically identified otherwise.

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

Gross death benefit and net death benefit are not necessarily the same when policy indebtedness exists. Outstanding policy indebtedness generally reduces the net death benefit payable under the applicable insurance contract. Actual policy provisions control.

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.

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 contract.

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 while maintaining a particular cash value or death benefit.

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, policy durability, and projected net death benefit.

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, legacy value, inheritance, or S&P 500 performance. Contributions, taxes, retirement timing, indexed-crediting results, policy-loan mechanics, loan rates, policy charges, future JUMPs, distributions, death timing, 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 death benefit, cash value, investment return, or legacy value. Contributions, indexed-crediting assumptions, distribution patterns, policy charges, loan provisions, loan costs, future JUMPs, death-benefit structure, retirement timing, death timing, and longevity can materially alter the comparison.

Choosing a higher or lower policy distribution can materially affect projected policy values, outstanding indebtedness, policy durability, and projected net death benefit. No single distribution level is appropriate for every policy owner. Actual results should be monitored against the applicable insurance contract, current policy values, current loan provisions, actual crediting results, current charges, and individual retirement objectives.

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 beneficiary or ownership arrangements, taking policy loans, accessing policy values, changing retirement distributions, or implementing any retirement-income or legacy strategy discussed here.