Why Not Buy Term and Invest the Difference Instead of Using an IUL for Retirement?

“Just buy term and invest the difference.”

If you’ve spent any time researching indexed universal life insurance, you’ve probably heard that sentence.

It sounds simple.

Buy inexpensive term life insurance.

Take the money you would have spent on permanent insurance.

Invest it.

Let the market compound it for decades.

Why make things more complicated?

That’s a fair question.

And if an IUL can’t produce a compelling answer, you shouldn’t use one just because somebody showed you a beautiful illustration.

But there’s a problem with the usual debate.

Most people compare the accumulation phase and stop there.

Retirement doesn’t stop there.

The real question is what happens when you actually need the money.

What Does “Buy Term and Invest the Difference” Mean?

The idea is straightforward.

Instead of paying a larger premium for permanent life insurance, you purchase term life insurance for the period when you believe you need coverage.

Then you invest the difference between the term premium and what you otherwise would have committed to the permanent policy.

Those investments might go into:

• A 401(k)
• A Traditional IRA
• A Roth IRA
• A taxable brokerage account
• Low-cost index funds
• Other investment accounts

Done consistently over a long period, that can be a very strong strategy.

There Are Real Advantages to Buying Term and Investing the Difference

Let’s give the strategy credit where it’s due.

Term insurance can provide a large death benefit for a relatively low initial premium compared with permanent insurance.

Direct investing can also give you:

• Direct market participation
• Broad investment choice
• Potentially low investment expenses
• High liquidity in taxable accounts
• Control over asset allocation
• Potentially substantial long-term growth

If you’re disciplined about investing the difference, those advantages are real.

And That’s a Big “If”

The strategy isn’t actually:

“Buy term.”

It’s:

“Buy term and consistently invest the entire difference for decades.”

Those are two separate behaviors.

Buying term is easy.

Investing the difference every month for 20 or 30 years requires discipline.

But Let’s Assume You Actually Do It

I don’t want to make the investing side lose because we assume bad behavior.

Let’s assume you’re disciplined.

You invest the difference.

You stay invested.

You keep your expenses reasonable.

You don’t panic during market declines.

You build a substantial portfolio.

Great.

Now retirement arrives.

That’s where I want to start the second half of the comparison.

Accumulation Isn’t Retirement Income

Suppose your investments grow to $1 million.

That’s a great result.

But your retirement isn’t funded by looking at the $1 million on a statement.

You have to turn it into cash flow.

Now the questions change.

How much can you withdraw?

How long does it need to last?

What happens if the market drops?

What taxes apply?

What happens if you live to 95?

What happens to your spouse if you die first?

Where Did You Invest the Difference?

This question matters enormously.

If you invested the difference in a Traditional 401(k) or Traditional IRA, the retirement tax treatment is very different from a Roth IRA.

If you invested it in a taxable brokerage account, you have another set of tax rules.

So “invest the difference” isn’t one strategy.

Where you invest the difference changes the retirement math.

If the Difference Went Into a Traditional 401(k) or IRA

Taxable distributions from Traditional retirement accounts are generally included in ordinary income under current federal tax rules.

Traditional retirement accounts can also create future required minimum distribution exposure under applicable rules.

That means the account balance isn’t necessarily the same as spendable retirement money.

If the Difference Went Into a Roth

That’s a much stronger tax comparison.

Qualified Roth distributions are generally tax-free under current federal rules.

There isn’t policy-loan interest attached to a qualified Roth distribution.

That’s a significant Roth advantage.

Any IUL comparison with a Roth needs to acknowledge it.

If the Difference Went Into a Taxable Brokerage Account

Now you may have taxes associated with dividends, interest, realized capital gains, and other taxable activity.

But you can also have substantial liquidity and direct control over the investments.

Again, different mechanics.

Now Compare That With an IUL

An indexed universal life policy is permanent life insurance.

It isn’t a brokerage account.

It isn’t a Roth IRA.

And it doesn’t directly invest your policy values in the referenced stock-market index.

It combines life insurance protection with cash-value accumulation potential and contractual access features.

The IUL Has Costs the Investment Account Doesn’t Have

An IUL can include:

• Cost of insurance charges
• Administrative expenses
• Other policy charges
• Surrender charges
• Loan interest when policy loans are used

Those costs matter.

Don’t hide them.

If the IUL Costs More, Why Would Anyone Use It?

Because the question isn’t simply:

“Which strategy has lower costs?”

The question is:

“What do I receive in exchange for those costs?”

That can include permanent life insurance protection, different cash-value mechanics, different market-loss exposure, and policy-loan-based access during retirement.

This Is Where the IUL JUMP Strategy Changes the Conversation

The JUMP Strategy isn’t simply:

“Buy permanent insurance instead of investing.”

The retirement-income strategy centers on how an appropriately designed policy can be funded, accumulated, and then accessed later using a feature we refer to as the Matching Indexed Participating Loan.

That loan structure can materially change the modeled retirement-income result.

What Is the Matching Indexed Participating Loan?

At a high level, values associated with policy loans may continue participating in an applicable indexed-crediting strategy according to the terms of the policy.

That means the retirement-income calculation can work differently from simply selling investments and removing those dollars from an investment account.

But this isn’t free money.

Policy loans accrue interest.

The Current Applicable Loan Rate Is 5%

With the policy structure we currently use for the IUL JUMP Strategy, the applicable loan rate is currently 5%.

The applicable loan feature has a contractual maximum loan rate of 6%.

That maximum matters because it gives us a defined upper boundary to stress-test in the retirement model.

The 5% Rate Isn’t Guaranteed to Stay at 5%

This distinction matters.

The current applicable rate is 5%.

The contractual maximum for the applicable loan feature is 6%.

So instead of building a retirement projection that only works at today’s rate, we can ask:

“What happens if we model the loan at 6%?”

Then Make the Other Assumptions Worse Too

Lower the indexed-crediting assumption.

Increase the retirement distribution period.

Look at larger cumulative loan balances.

Check the remaining policy value.

Check the net death benefit.

Check the risk of lapse.

That’s how you test a strategy.

Positive Loan Arbitrage Isn’t Guaranteed

The Matching Indexed Participating Loan feature doesn’t guarantee that indexed crediting will exceed the applicable policy loan cost.

There can be years when the relationship is favorable.

There can be years when it isn’t.

So don’t buy an IUL because somebody says:

“You’re borrowing at 5% and earning more than 5%, so you can’t lose.”

That’s not a responsible assumption.

Now Let’s Talk About the Up to 300% More Projected Retirement Income

This is where the JUMP Strategy gets people’s attention.

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 huge number.

Which is exactly why you shouldn’t accept it without asking:

“Show me how.”

JUMP Isn’t Claiming to Earn 300% More Investment Return

This distinction is critical.

We’re talking about projected retirement income.

We’re not claiming an IUL earns three times the investment return of a stock portfolio.

Those are completely different statements.

So How Can the Retirement-Income Difference Become So Large?

The difference can come from the combined economics of the accumulation and distribution phases.

On the traditional retirement-account side, the model may include:

• Contributions
• Investment returns
• Investment expenses
• Market volatility
• Tax-deferred accumulation
• Taxable retirement distributions
• Withdrawal sequencing
• RMD considerations
• Ending account values

On the JUMP side, the model may include:

• Premium funding
• Insurance costs
• Indexed-crediting assumptions
• Policy charges
• Matching Indexed Participating Loan mechanics
• Loan interest
• Potential tax treatment of properly structured policy access
• Projected loan balances
• Remaining policy values
• Net death benefit

The up to approximately 300% difference can emerge from how those entire systems produce retirement cash flow over time.

Taxes Can Be Part of the Difference

If the investment side is a Traditional 401(k) or IRA, taxable distributions generally create ordinary income under current federal rules.

That means a $100,000 gross withdrawal isn’t necessarily $100,000 of spendable retirement cash.

With a properly structured and maintained non-MEC life insurance policy, withdrawals up to basis and policy loans may potentially provide access to policy values without current income taxation under applicable federal tax rules.

But policy loans accrue interest and introduce their own risks.

Distribution Mechanics Can Be Part of the Difference

When you sell investments or withdraw money from a retirement account, those dollars leave the account.

The remaining assets have to support the rest of retirement.

The JUMP Strategy uses different contractual mechanics.

Relevant policy values associated with loans may continue participating in applicable indexed crediting according to the policy terms.

Over a long retirement, that difference can materially affect the modeled cash flow.

Sequence Risk Can Be Part of the Difference

Direct market investments can experience significant losses.

If those losses happen while you’re simultaneously taking retirement withdrawals, the order of returns can affect how long the portfolio lasts.

An IUL uses a different crediting structure and doesn’t directly invest policy values in the referenced index.

That doesn’t eliminate risk.

It changes the type of risk being managed.

Loan Mechanics Can Be Part of the Difference

This is especially important with JUMP.

The loan design isn’t an afterthought.

It’s part of the retirement-income engine.

How the policy handles values associated with loans, what loan interest costs, how indexed crediting performs, and how long loans remain outstanding can materially affect the projected retirement-income result.

Those Differences Can Compound Over 20 or 30 Years

A small difference in one year may not look dramatic.

But retirement isn’t one year.

It’s potentially decades of withdrawals, taxes, investment returns, indexed crediting, loan interest, policy charges, and compounding.

That’s why two strategies can start with comparable dollars committed toward retirement and finish with dramatically different modeled retirement-income outcomes.

But What If I Invest the Difference in a Roth IRA?

Good question.

That changes the comparison materially.

Qualified Roth distributions are generally tax-free under current federal rules.

So you shouldn’t take a 300% modeled comparison against a Traditional IRA or 401(k) and automatically claim the same result against a Roth IRA.

The Roth deserves its own comparison.

This Is Why We Don’t Force the 300% Onto Every Scenario

If we’re comparing JUMP with a Roth, model the Roth.

If we’re comparing JUMP with a Traditional IRA, model the Traditional IRA.

If we’re comparing JUMP with a taxable brokerage account, model the brokerage account.

The strategy should win because the numbers support it.

Not because we changed the assumptions until it won.

What Would a Fair Buy-Term-and-Invest-the-Difference Comparison Look Like?

Start with the same total dollars.

That’s critical.

If someone is willing to commit $30,000 a year to an IUL strategy, don’t compare it with somebody spending $1,000 on term insurance and investing only $5,000.

Where did the other money go?

Use the Same Out-of-Pocket Commitment

For example, if the total available annual cash flow is $30,000, a comparison could conceptually examine:

Strategy A:

Purchase the appropriate amount of term insurance and invest the remaining annual cash flow.

Strategy B:

Fund an appropriately designed IUL using the same total annual cash-flow commitment.

Then run both strategies forward.

But Keep the Insurance Need Comparable Too

This is another place comparisons get distorted.

If Strategy A buys $1 million of term coverage and Strategy B starts with a completely different death benefit, you need to understand why.

Insurance protection has economic value.

A fair comparison should account for it rather than pretending it doesn’t exist.

Then Compare the Accumulation Phase

Show:

• Total dollars contributed
• Term insurance premiums
• Investment contributions
• Investment returns
• Investment expenses
• IUL premiums
• IUL insurance charges
• IUL cash value
• IUL crediting assumptions
• Death benefits

But don’t stop there.

Then Compare the Retirement-Income Phase

This is where the real test begins.

Show:

• Retirement starting age
• Annual retirement cash flow
• Applicable taxes
• Investment withdrawals
• Policy loans
• Loan interest
• Market-loss scenarios
• Lower IUL crediting scenarios
• Remaining account values
• Remaining policy values
• Outstanding policy loans
• Net death benefit
• How long the income lasts

That’s the Comparison I Want to See

Not a social-media graphic.

Not:

“The S&P 500 averaged X, therefore IUL is terrible.”

And not:

“This IUL illustration shows a huge income number, therefore investing is terrible.”

Show me the entire retirement system.

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

This is a separate comparison.

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

That difference can be driven in part by the retirement loan mechanics.

Again, it isn’t guaranteed.

Why Mention the 40% Here?

Because simply saying “use an IUL” misses an important point.

Not every IUL is designed the same way.

If retirement income is the objective, the distribution mechanics can matter as much as the accumulation illustration.

That’s one of the central ideas behind JUMP.

What If the Market Performs Extremely Well?

Direct investing can have a major advantage in strong market environments because investors can participate directly in the performance of the securities they own, less applicable costs.

An IUL indexed account uses contractual crediting terms.

Caps, participation rates, spreads, or other provisions can limit credited interest relative to the full performance of the referenced index.

That’s a real tradeoff.

What If the Market Has a Bad Decade?

Now the comparison can look different.

A market-based portfolio experiences its investment results directly.

An IUL indexed account uses its contractual crediting formula and applicable floor.

Again, a 0% indexed-crediting floor doesn’t mean total policy value can’t decline because policy charges and loan interest still exist.

What About Liquidity?

This is an area where direct investing can have a major advantage.

A taxable brokerage account can provide substantial liquidity.

An IUL is a long-term insurance contract.

Early cash surrender value can be lower than premiums paid, and surrender charges may apply.

Don’t Use Long-Term Insurance for Short-Term Money

If you may need the money next year for:

• A house
• A business
• Emergency expenses
• College
• A major purchase

that should be part of the decision before committing significant dollars to an IUL.

What About the Life Insurance?

Term insurance is designed to provide coverage for a specified period.

That can be exactly what someone needs.

Maybe you need $2 million of coverage while your children are young and your mortgage is large.

Twenty or 30 years later, maybe that need is gone.

Term can make a lot of sense.

But What If You Want Coverage to Last for Life?

That’s a different objective.

You may want permanent coverage for:

• A surviving spouse
• Children
• Grandchildren
• Estate liquidity
• Business planning
• Legacy goals
• Other permanent insurance needs

Term and permanent insurance solve different problems.

There’s Also an Insurability Question

You might be healthy today.

You don’t know what your health will look like 20 years from now.

If your term coverage expires and you later discover you still want life insurance, new coverage may be more expensive or unavailable based on your health and age.

Permanent coverage addresses that issue differently, subject to the contract remaining in force.

But Permanent Doesn’t Mean Invincible

An IUL can lapse if it isn’t adequately funded or managed.

Large policy loans, loan interest, policy charges, lower crediting, and other factors can put pressure on policy values.

That’s why we monitor the policy.

The Real Objection: “Am I Overpaying for Insurance?”

This is what’s actually going through your head.

You look at the IUL premium and think:

“Why would I pay this much when I can buy term for a fraction of it?”

That’s a legitimate question.

But you’re not paying the difference solely for a larger insurance premium.

Part of the premium supports insurance costs and expenses, and part can contribute to policy cash value according to the contract.

The question is whether the entire policy economics justify the commitment.

The Fear of Looking Stupid

There’s another thought people rarely say out loud.

“What if I buy this thing and five years from now realize I should have just invested the money?”

You don’t want to be the person who got sold an expensive insurance policy because somebody showed you a giant number on an illustration.

Neither do I.

But There’s an Opposite Fear Too

“What if I invest everything, retire into a terrible market, taxes are higher than I expected, and I wish I had another source of retirement income?”

That’s the contradiction.

You don’t want to sacrifice investment growth unnecessarily.

But you also don’t want your entire retirement relying on one type of asset and one set of rules.

“What If We Mess This Up and Regret It?”

As retirement gets closer, this thought gets louder:

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

At 45, you may feel like you have time to recover.

At 58, retirement doesn’t feel theoretical anymore.

You can see it coming.

Now mistakes feel more expensive.

“We Should Be Able to Handle This Ourselves”

You may also think:

“We should be able to handle this ourselves.”

You’ve saved.

You’ve invested.

You understand the basic idea of buying low-cost funds and letting them grow.

Then someone starts talking about policy loans, indexed crediting, participation rates, MEC limits, and death-benefit design.

It can feel unnecessarily complicated.

You Don’t Need Complexity for the Sake of Complexity

If a simpler strategy accomplishes your goals better, that’s useful information.

Complexity has to earn its place.

The JUMP Strategy should have to prove that the additional mechanics actually create something valuable for you.

“I Don’t Want to Ask My Kids for Help”

For someone approaching retirement, the deeper goal often isn’t beating an index.

It’s independence.

You think:

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

You want enough retirement cash flow to handle your own life.

You want to protect your spouse.

And if there’s money left, you’d rather help your children than become financially reliant on them.

The Identity Conflict: Investor vs. Protector

Buy term and invest the difference speaks directly to the investor in you.

Keep insurance costs low.

Own the investments.

Stay liquid.

Capture market growth.

Keep it simple.

JUMP Speaks to the Protector Too

Permanent death benefit.

Another retirement-income bucket.

Different exposure to market losses.

Policy-loan access.

Legacy.

The right answer shouldn’t require you to pretend one side of that conflict doesn’t exist.

Don’t Let an Ideology Make the Decision

Some people believe permanent life insurance is always bad.

Others sell it as if everybody should own it.

I don’t find either position useful.

Give me the person.

Give me the numbers.

Give me the alternatives.

Then let’s compare.

The Retirement Math Method™

This is exactly why we use the Retirement Math Method™.

Let’s say you have $30,000, $50,000, or $100,000 a year of cash flow available for long-term retirement planning.

We can model what happens if you buy the appropriate term coverage and invest the remaining dollars.

Then we can model the JUMP Strategy using the same overall cash-flow commitment.

We can examine:

• Insurance protection
• Total contributions or premiums
• Investment growth
• Investment expenses
• Taxes
• IUL policy charges
• Indexed-crediting assumptions
• Retirement withdrawals
• Matching Indexed Participating Loan mechanics
• The current 5% applicable loan rate
• The contractual 6% maximum loan rate
• Lower-crediting scenarios
• Market-loss scenarios
• Projected retirement income
• Ending values
• Projected net death benefits

Then we make the assumptions less favorable.

If JUMP still produces a compelling result, now we have something worth discussing.

If buying term and investing the difference produces the better outcome for your goals, you should know that too.

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

Let the math do the talking.

Frequently Asked Questions

Is buying term and investing the difference better than an IUL?

Neither strategy is universally better. Buying term and investing the difference can provide inexpensive temporary insurance, direct investment ownership, strong liquidity, and substantial long-term growth potential. An IUL provides permanent life insurance, cash-value accumulation potential, indexed-crediting features, and policy-loan access. The appropriate comparison should consider the same total dollars, insurance need, taxes, costs, risks, liquidity, and retirement-income objective.

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

In certain modeled comparisons evaluated by FPP Financial, 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. This isn’t guaranteed and shouldn’t be interpreted as 300% more investment return. The result is specific to the assumptions used in the comparison.

Where can the 300% difference come from?

The modeled difference can arise from the combined retirement-income mechanics, including taxes, investment withdrawals, market exposure, insurance costs, indexed crediting, Matching Indexed Participating Loan mechanics, loan interest, distribution timing, longevity, and remaining values. The comparison needs to identify each assumption before the result can be evaluated meaningfully.

Does the 300% comparison apply to a Roth IRA?

Not automatically. Qualified Roth IRA distributions are generally tax-free under current federal rules, which creates a materially different comparison from a Traditional IRA or 401(k). A Roth should be modeled separately rather than assuming a result from another comparison applies to it.

Does an IUL earn the stock-market return?

No. An IUL doesn’t directly invest policy values in the referenced stock-market index. Indexed interest is calculated under the policy’s crediting methodology and may be affected by caps, participation rates, spreads, floors, and other contractual provisions.

Can I lose money in an IUL even with a 0% floor?

Yes. A 0% indexed-crediting floor doesn’t guarantee total policy value cannot decline. Cost of insurance, policy charges, withdrawals, policy loans, and loan interest can reduce policy values.

What is the current applicable JUMP loan rate?

With the policy structure we currently use for the IUL JUMP Strategy, the applicable loan rate is currently 5%, with a contractual maximum loan rate of 6% for the applicable loan feature. These figures should be verified against the current carrier-approved illustration and actual contract before reliance.

Does the 6% maximum guarantee positive loan arbitrage?

No. The contractual maximum provides an upper boundary for the applicable loan rate under the policy provisions. It doesn’t guarantee indexed crediting above the loan rate, positive arbitrage, retirement income, policy value, death benefit, or policy durability.

Is term insurance cheaper than IUL?

Term life insurance generally provides temporary death-benefit protection for a lower initial premium than permanent cash-value life insurance for comparable coverage, all else equal. The products serve different purposes and shouldn’t be compared on premium alone.

Can I use both term insurance and an IUL?

Yes. Insurance planning doesn’t have to be all-or-nothing. Someone may use term coverage for a large temporary need while also using permanent coverage for a separate long-term objective if appropriate.

Does JUMP guarantee more retirement income than investing?

No. JUMP results aren’t guaranteed. Actual and projected outcomes can change materially with policy design, insurance costs, indexed-crediting results, loan rates, investment performance, taxes, distribution amounts, longevity, policy management, and other factors.

So Should You Buy Term and Invest the Difference?

Maybe.

If that’s the stronger strategy for your situation, the math should show it.

But don’t stop the analysis at:

“Term is cheaper and stocks historically grow.”

That’s only the accumulation side.

Take the comparison all the way through retirement.

And Don’t Buy an IUL Because of a Big Illustration

Don’t buy the 300%.

Don’t buy the 40%.

Don’t buy a projected retirement-income number because it looks impressive.

Ask where the number came from.

Then make the assumptions less favorable.

That’s where the real comparison starts.

Want to Compare JUMP With Buying Term and Investing the Difference?

We’ll put the strategies next to each other and run the math.

We can compare the same total annual cash-flow commitment, appropriate insurance protection, investment assumptions, taxes, policy costs, retirement distributions, and long-term outcomes.

And when pertinent, we’ll show you exactly where the JUMP retirement-income difference comes from.

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 separate modeled comparisons, JUMP has produced approximately 40% more projected retirement income than the traditional IUL design being compared.

Neither result is guaranteed.

The numbers are only as useful as the assumptions behind them.

So ask us to show you the assumptions.

Ask us to show you the loan mechanics.

Ask us to model the current 5% applicable loan rate.

Ask us to stress-test the applicable loan feature at its contractual 6% maximum.

Ask us to lower the crediting assumption.

Ask us to compare the retirement income after applicable taxes and costs.

Then decide.

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

Let the math do the talking.

Schedule Your Retirement Strategy Appointment

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Important Disclosure

This article is for educational purposes only and isn’t intended as individualized tax, legal, accounting, investment, securities, insurance, or retirement-planning advice. FPP Financial does not provide tax or legal advice. Consult appropriately qualified tax and legal professionals regarding your individual circumstances.

Term life insurance and indexed universal life insurance are different products designed for different purposes. Term insurance generally provides coverage for a specified period and typically does not accumulate cash value. Indexed universal life insurance is permanent life insurance and is subject to underwriting, policy charges, cost of insurance, surrender charges, liquidity restrictions, premium requirements, policy-specific loan provisions, and other contractual terms.

Indexed universal life policies don’t directly invest policy values in a stock-market index. Indexed interest is determined under the policy’s contractual crediting methodology and may be affected by caps, participation rates, spreads, floors, index-account terms, and other provisions. A 0% indexed-crediting floor doesn’t mean total policy value cannot decline. Policy charges, cost of insurance, withdrawals, policy loans, and loan interest can reduce policy values. Policy illustrations contain guaranteed and nonguaranteed values and aren’t predictions or guarantees of future performance.

Policy loans aren’t withdrawals and generally accrue interest. Loans and withdrawals reduce policy cash values and death benefits and may increase lapse risk. Participating or indexed loan structures don’t guarantee positive loan arbitrage, indexed crediting greater than loan costs, or a particular retirement-income result. If a policy with gain and outstanding indebtedness is surrendered or lapses, taxable income may result based on policy basis, gain, indebtedness, and applicable tax law. Modified Endowment Contracts are subject to different federal tax rules.

With the policy structure currently used by FPP Financial for the IUL JUMP Strategy, the applicable loan rate is currently represented as 5%, with a contractual maximum loan rate of 6% for the applicable loan feature. These figures should be confirmed using the current carrier-approved illustration and governing insurance contract before reliance. The current 5% rate isn’t a guarantee that the applicable loan rate will remain at 5%. The 6% figure refers to the represented contractual maximum for the applicable loan feature and should be verified against the actual contract issued to an individual policy owner.

References to the IUL JUMP Strategy and Matching Indexed Participating Loan feature describe a planning approach and policy-specific feature evaluated by FPP Financial. Availability, eligibility, loan treatment, loan rates, indexed-crediting treatment, caps, participation rates, spreads, and other provisions are policy-specific. The feature doesn’t guarantee positive loan arbitrage, a particular retirement-income level, death benefit, tax result, policy value, or that a policy will remain in force. The insurance carrier and product used in an individual recommendation are reviewed during a personal consultation and aren’t identified in this article.

Statements that the IUL JUMP Strategy has produced up to approximately 300% more projected retirement income than a compared 401(k), Traditional IRA, or other tax-deferred retirement strategy refer only to specific modeled comparisons using particular assumptions. The approximately 40% comparison against a traditional IUL likewise refers only to specific modeled comparisons. These figures aren’t guarantees, promises, expected returns, or statements that every client, policy, investment account, retirement account, or IUL will experience those differences.

The up to approximately 300% comparison refers to projected retirement-income outcomes, not a claim that an IUL earns 300% more investment return. The result can be affected by contribution or premium amounts, term insurance premiums, investment selection, investment returns, investment expenses, taxation, withdrawal timing, market performance, insurance costs, policy charges, indexed-crediting assumptions, loan rates, loan mechanics, retirement timing, distribution amounts, longevity, policy values, policy durability, death benefits, and other assumptions.

A buy-term-and-invest-the-difference comparison should account for the same or clearly identified total out-of-pocket commitment, appropriate insurance coverage, actual investment vehicle, investment expenses, applicable taxes, liquidity, time horizon, retirement-distribution assumptions, and other relevant factors. Results can change materially when assumptions change.

Before purchasing, replacing, funding, borrowing against, withdrawing from, or surrendering life insurance, review the carrier-approved illustration, actual insurance contract, guaranteed and nonguaranteed values, policy charges, surrender provisions, loan provisions, crediting methodology, potential lapse scenarios, tax considerations, insurance needs, and available alternatives. Investment strategies involve risk, including possible loss of principal. Consider coordinating with appropriately qualified tax, legal, insurance, investment, and financial professionals before making a decision.