IUL JUMP Strategy vs. SEP IRA: Which Can Produce More Retirement Income for a Business Owner?

You own a business.

You finally have enough profit that retirement planning is no longer something you’ll deal with “later.”

Now there’s real money available.

Maybe $20,000 a year.

Maybe $40,000.

Maybe considerably more.

And suddenly you’re asking:

“Where should I put it?”

A SEP IRA can look like the obvious answer.

It’s familiar.

It can provide valuable current tax benefits when applicable.

It’s relatively straightforward.

But then another question comes up:

“Am I just postponing a tax problem until retirement?”

That’s where comparing a SEP IRA with an indexed universal life strategy can become useful.

A SEP IRA and an IUL Are Completely Different

A SEP IRA is a retirement arrangement designed primarily for employers and self-employed individuals.

An indexed universal life policy is permanent life insurance.

It can provide a death benefit and build cash value.

When properly structured and maintained, policy values may also become part of a retirement-income strategy.

So this isn’t about pretending an IUL is another type of IRA.

It isn’t.

The useful comparison is:

“What happens to the same business-owner dollars under each strategy?”

Why Business Owners Like SEP IRAs

A SEP IRA can solve a very real problem.

Your business has a profitable year.

You don’t want every available dollar sitting in the business or landing in your checking account.

You want to save for retirement.

And when eligible SEP contributions provide a current deduction under applicable tax rules, that can be attractive.

You get to put money toward retirement while potentially reducing current taxable income.

That’s a real benefit.

The Current Tax Deduction Can Feel Hard to Turn Down

Imagine your business has its best year ever.

Your accountant tells you what the tax bill could look like.

Your immediate thought is:

“What can I do to reduce this?”

That’s understandable.

But there’s another question worth asking before every retirement decision becomes a current-year tax decision:

“What does this do to my taxes later?”

A Tax Deduction Today Isn’t the Same as Tax Elimination

Traditional SEP IRA money generally grows tax-deferred.

Taxable distributions are generally treated as ordinary income under current federal rules.

So the basic trade can look like this:

Tax benefit now.

Taxable distributions later.

That can still be an excellent trade.

But you should know what you’re agreeing to.

Business Owners Can Become Very Good at Deferring Taxes

And that’s exactly what can create the later problem.

Imagine you’re 58.

You’ve spent 25 years building your company.

You have $1.2 million sitting in tax-deferred retirement accounts.

You feel good about that number.

You should.

But then you realize:

“I’ve never paid the income tax on a large portion of this money.”

Now the retirement question changes.

How Much of Your SEP IRA Is Actually Spendable?

Suppose you retire with $1.2 million in a SEP IRA.

That doesn’t automatically mean you have $1.2 million available to spend after taxes.

If much of that account consists of deductible contributions and tax-deferred growth, taxable distributions generally create ordinary income.

So I want to know:

How much income do you plan to take?

What tax rate are we modeling?

What other taxable income will you have?

Will you sell your business?

Will you have rental income?

Will Social Security be coming in?

What happens when applicable RMDs begin?

The Business Sale Can Make This Even More Interesting

Business owners don’t always retire with one clean income source.

You may have:

• A SEP IRA
• A business sale
• Real estate
• A brokerage account
• Social Security
• Other retirement accounts
• Cash reserves

That means your retirement tax picture can become more complicated than simply choosing a withdrawal rate from an IRA.

If you’re planning a business sale around retirement, the timing of income matters even more.

What About Required Minimum Distributions?

Traditional SEP IRA assets are generally subject to applicable required minimum distribution rules under current federal law.

That means there can eventually be a point where the government tells you a minimum amount has to come out.

Even if you don’t need it.

That’s when a successful business owner can find themselves saying:

“Why am I being forced to take income I wasn’t planning to spend?”

Because tax deferral doesn’t give you permanent control over when every dollar is taxed.

An IUL Has a Different Tax Structure

An IUL isn’t a qualified retirement plan.

Premiums generally don’t create the same current income-tax deduction as eligible SEP IRA contributions.

That’s a disadvantage if your only objective is reducing this year’s taxable income.

But the retirement side works differently.

With a properly structured and maintained non-MEC life insurance policy, policy values may potentially be accessed through withdrawals to basis and policy loans without current income taxation under current federal rules, subject to applicable requirements.

Don’t Translate That Into “Tax-Free Money Forever”

That’s too simplistic.

Policy loans are real loans.

They create policy indebtedness.

Applicable loan charges generally accrue.

Loans and withdrawals can reduce policy values and death benefits.

Large loan balances can increase lapse risk.

And if a policy lapses or is surrendered with gain and outstanding indebtedness, taxable income can potentially result.

MEC status can also materially change distribution taxation.

So the Tax Comparison Is Really “Now vs. Later”

The SEP IRA may give the business owner a valuable deduction today.

The IUL generally doesn’t give you that same deduction.

But the IUL may potentially provide a different tax structure when accessing policy values later.

That’s why I don’t want to compare these strategies using only this year’s tax return.

Run the retirement years too.

What About Market Risk?

SEP IRA assets can be invested in a wide range of investments, subject to the account and provider.

If you’re invested in stocks, mutual funds, ETFs, or other market-based assets, your account can rise and fall with those investments.

That gives you meaningful upside potential.

It also creates downside exposure.

A Business Owner Has Already Taken a Lot of Risk

This part gets overlooked.

You may already have most of your working-life wealth tied to:

Your company.

Your industry.

Your employees.

Your customers.

Your local economy.

Then your retirement account is exposed to market risk too.

That doesn’t automatically make the SEP IRA wrong.

But it does make risk allocation worth discussing.

What Happens If the Market Falls Right After You Sell the Business?

Imagine you sell your company at 64.

For the first time in 30 years, you don’t have business income coming in.

Now you’re living from the assets you’ve accumulated.

Then the market falls 25%.

That’s a very different emotional experience from watching the market fall when you were 45 and still earning money.

Now you’re withdrawing.

That’s where sequence-of-returns risk enters the conversation.

How Does an IUL Handle Market Exposure?

An IUL isn’t directly invested in the S&P 500 or another referenced index.

Indexed interest is determined according to the policy’s applicable crediting terms.

Those terms may include:

• Caps
• Participation rates
• Spreads
• Crediting periods
• Indexed-crediting floors
• Other contractual provisions

Under an applicable indexed strategy with a 0% floor, a negative index result may produce a 0% indexed-crediting result rather than negative indexed interest.

But the 0% Floor Doesn’t Mean You Cannot Lose Policy Value

Policy charges continue.

Cost of insurance continues.

Loan charges can continue.

Withdrawals and policy loans can reduce values.

So a 0% indexed-crediting result does not guarantee a 0% change in total cash value.

That’s an important distinction.

The SEP IRA Gets Something the IUL Doesn’t

If the investments in your SEP IRA participate fully in a strong market year, you can benefit from those investment gains according to the investments you own.

An IUL’s indexed-crediting formula may limit positive indexed interest through a cap, participation rate, spread, or other applicable provision.

If an index rises 25%, an IUL with a 10% cap doesn’t simply receive 25% indexed interest.

That’s part of the tradeoff.

What About Contribution Flexibility?

This can matter enormously to a business owner.

Your income might look like this:

Year one: fantastic.

Year two: even better.

Year three: a major customer leaves.

Year four: you’re growing again.

Business income isn’t always a straight line.

A SEP IRA can provide contribution flexibility within applicable rules and limits.

But an IUL is a long-term insurance contract.

Funding consistency and policy design matter.

If you’re going to commit meaningful business cash flow to an IUL strategy, you need to understand what happens when the business has a bad year.

Don’t Fund an IUL Like Every Year Will Be Your Best Year

This is a mistake I don’t want a business owner making.

You have one incredible year.

You design a policy around the maximum amount you could possibly afford that year.

Then business slows down.

Now the policy funding feels like a burden.

A better question is:

“What amount can I reasonably support through normal business cycles?”

Now Add the IUL JUMP Strategy

The IUL JUMP Strategy changes the conventional IUL funding conversation because it uses a Matching Indexed Participating Loan.

The matching amount is an actual policy loan.

It isn’t free money.

It isn’t a business contribution.

It isn’t an employer match.

The loan proceeds are redeployed into the same policy as additional funding under the JUMP design.

Here’s the $10,000 Annual JUMP Example

Assume the business owner contributes $10,000 per year out of pocket.

By Year 11, the business owner is still contributing:

$10,000 out of pocket.

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

That produces $60,000 of total annual funding shown in this example.

But the additional $50,000 is borrowed money.

It creates policy indebtedness.

The JUMP Loans Accumulate

The Year 5 loan doesn’t pay off the Year 3 loan.

The Year 7 loan activity doesn’t erase the earlier indebtedness.

The loans accumulate.

That’s why I don’t want someone looking only at:

“Wow, $10,000 turned into $60,000 of annual funding.”

Look at the other side too.

How much policy indebtedness exists?

Why Put the Borrowed Dollars Back Into the Policy?

The JUMP structure is designed so the loan proceeds are redeployed into the same policy rather than taken out and spent.

Think about two conceptual buckets.

Bucket One: the business owner’s contributed dollars.

Bucket Two: accumulated Matching Indexed Participating Loan dollars.

Under the indexed strategy used in this example, both buckets have the same potential 10% cap and 0% indexed-crediting floor.

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

The Current Applicable JUMP Loan Rate Is 5%

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.

That doesn’t mean the rate is guaranteed to remain at 5%.

So I want the strategy tested at the current 5% rate and at the applicable 6% maximum.

Where Does the 6.87% Historical Number Come From?

One historical analysis used with this strategy examined annual S&P 500 price changes from 2006 through 2020.

Dividends were excluded because the policy isn’t directly invested in the index.

The analysis applied the strategy’s 10% cap and 0% indexed-crediting floor.

Negative annual price changes were treated as 0% for the indexed-crediting calculation.

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

Under those assumptions, the period produced a:

6.87% historical average indexed-crediting result.

That isn’t the historical S&P 500 return.

It isn’t a guaranteed future IUL crediting rate.

And it isn’t a guaranteed policy return.

Where Does the 1.87-Point Modeled Spread Come From?

Using that historical indexed-crediting example and the current applicable 5% loan rate:

6.87% – 5.00% = 1.87 percentage points.

That’s the modeled positive-arbitrage concept.

If applicable indexed crediting exceeds the loan cost, the loan-funded portion can have favorable economics under the model.

If indexed crediting is 0% while the loan costs 5%, the economics are unfavorable for that period.

Positive arbitrage isn’t guaranteed.

What Happens as the JUMPs Increase?

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 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 modeled effective results under the assumptions used in that analysis.

They aren’t S&P 500 returns.

They aren’t IUL indexed-crediting rates.

They aren’t guaranteed policy returns.

Applicable policy charges and other factors still need to be accounted for.

Now Compare That With the SEP IRA

This is where the conversation becomes useful.

Take the same business owner.

Same out-of-pocket retirement dollars.

Same retirement age.

Same desired retirement lifestyle.

Then model the SEP IRA and the JUMP Strategy side by side.

Can the JUMP Strategy Produce More Retirement 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.

A SEP IRA is another tax-deferred IRA structure, so the retirement-income comparison is absolutely worth running.

But that does not mean every SEP IRA comparison will produce a 300% difference.

The specific assumptions have to be modeled.

Where Could the Difference Come From?

Don’t stop at the headline.

Ask what created it.

Was it the tax treatment of SEP IRA distributions?

Was it the Matching Indexed Participating Loan?

Was it the modeled positive-arbitrage effect?

Was it market sequence risk?

Was it the retirement distribution structure?

Was it the assumptions used for longevity?

Was it several of those factors working together?

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

Then Try to Break the Projection

This is where I get more interested.

Lower the IUL crediting assumption.

Raise the applicable loan rate in the model to the contractual 6% maximum.

Run lower crediting and 6% together.

Remove a future JUMP.

Run the strategy through age 95.

On the SEP IRA side, run a bad market sequence around retirement.

Run multiple tax assumptions.

Run different withdrawal levels.

Now compare again.

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

We’ve Also Seen a Difference Between JUMP and a Traditional IUL

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

That’s important for a business owner considering life insurance for retirement.

Simply saying:

“I own an IUL.”

doesn’t tell you how efficiently that policy is designed for the retirement objective.

Funding design matters.

Loan mechanics matter.

Policy charges matter.

Crediting assumptions matter.

Retirement distribution mechanics matter.

Future JUMPs Are Not Guaranteed

A SEP IRA contribution doesn’t require you to medically qualify for life insurance.

The JUMP Strategy does involve insurance underwriting.

Each planned future JUMP requires a new application and carrier approval for the increased death benefit.

Qualification can be affected by:

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

For business owners, financial underwriting can be particularly relevant because the requested amount of life insurance has to be financially justified.

Your Business Success Can Matter to Future JUMPs

This is a very different consideration from a SEP IRA.

Imagine your business income is $400,000 when you begin the strategy.

Then three years later the company has a terrible year.

Or you sell the company.

Or you retire earlier than expected.

Your financial circumstances can affect future underwriting.

So future JUMPs shouldn’t be presented as guaranteed on the day the original policy is issued.

What If You Don’t Qualify for the Next 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 the next JUMP isn’t approved, the previous successful progression doesn’t automatically disappear under the mechanics described here.

You can remain at the previously achieved matching-loan level and potentially reapply at a later policy anniversary, subject to actual carrier rules and approval.

But the retirement-income projection should be updated.

What About the Death Benefit?

A SEP IRA is a retirement account.

It isn’t life insurance.

An IUL includes a death benefit while the policy remains in force.

For a business owner, that may matter for reasons beyond retirement.

Your family may rely on your income.

Your estate may need liquidity.

Your business may have obligations.

You may simply want to leave a larger legacy.

But don’t look only at the original death benefit.

If policy loans accumulate, outstanding indebtedness generally reduces the net death benefit payable under the contract.

What If You Already Have Plenty of Life Insurance?

That’s another good question.

If you already have sufficient coverage, don’t buy more insurance merely because someone showed you an attractive retirement-income illustration.

The insurance needs to make sense.

The funding needs to make sense.

The retirement-income math needs to make sense.

And the policy needs to be suitable for what you’re trying to accomplish.

Do You Have to Choose Between a SEP IRA and an IUL?

No.

This is where business owners sometimes get trapped by false choices.

You can potentially use different strategies for different jobs.

Maybe part of your retirement savings goes into the SEP IRA because the current deduction is valuable.

Maybe another portion goes toward an IUL strategy because you’re building a different retirement-income bucket.

Maybe additional money remains liquid or goes into a taxable investment account.

The question becomes:

“What job should each dollar do?”

How Would I Compare the SEP IRA With the IUL JUMP Strategy?

Start with the same business owner.

Same age.

Same retirement date.

Same out-of-pocket dollars.

Same retirement-income goal.

Then give both strategies their actual advantages.

On the SEP IRA Side, Show Me:

• Annual contributions
• Current modeled tax benefit
• Investment assumptions
• Investment expenses
• Projected retirement balance
• Market volatility
• Projected retirement withdrawals
• Estimated taxes on distributions
• Applicable RMD assumptions
• Projected account value at age 80, 90 and 95
• Projected beneficiary value

On the IUL JUMP Side, Show Me:

• Client contributions
• Policy charges
• Cost of insurance
• Indexed-crediting assumptions
• Matching Indexed Participating Loans
• Accumulated policy indebtedness
• The current 5% applicable loan rate
• The contractual maximum 6% loan rate
• Future JUMP assumptions
• Projected retirement distributions
• Policy durability
• Projected net death benefit

Then Run the Bad Years

Business owners understand this better than almost anyone.

A projection that only works when everything goes right isn’t much of a plan.

What happens if the market crashes shortly after retirement?

What happens if the business sale doesn’t bring as much money as expected?

What happens if taxes are higher?

What happens if you live to 95?

On the IUL side, what happens if indexed crediting is lower?

What happens if the applicable loan rate reaches 6%?

What happens if those two things occur together?

What happens if a future JUMP isn’t approved?

That’s the comparison I want.

The Business Owner’s Real Fear Usually Isn’t a Lower Return

You’ve spent years taking risks.

You signed personal guarantees.

You made payroll when cash flow was tight.

You lost sleep over customers.

You survived bad months.

Maybe bad years.

Now you’re getting closer to retirement.

The thought in your head isn’t:

“How do I squeeze another 0.7% out of my portfolio?”

It’s:

“After everything I went through building this business, did I actually turn it into enough retirement income?”

Then There’s the Identity Problem

Business owners are used to being the person everyone else calls.

Your employees need something.

Your family needs something.

A customer has a problem.

You solve it.

That’s been your identity for decades.

Retirement can flip that around.

Suddenly you’re thinking about needing help yourself someday.

And you hate that thought.

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

“We should be able to handle this ourselves.”

Then the fear underneath all the numbers:

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

You Don’t Get to Rebuild the Business at 78

That’s what makes retirement decisions feel different.

At 40, a bad financial decision hurts.

You still have time.

At 65, you know the runway is shorter.

You’ve already built the company.

You’ve already put in the 60-hour weeks.

You don’t want retirement to require another rescue mission.

So, Is an IUL or SEP IRA Better for a Business Owner?

A SEP IRA can offer meaningful advantages for eligible business owners and self-employed individuals, including tax-deferred accumulation and potentially valuable current tax deductions under applicable rules.

It can also provide broad investment flexibility through the investments available in the account.

An IUL provides permanent life insurance, indexed-crediting potential and a different structure for accessing policy values.

The IUL JUMP Strategy adds Matching Indexed Participating Loan mechanics that can materially change projected retirement-income results under certain assumptions.

But the answer shouldn’t come from choosing the product with the best sales story.

Run the same business-owner dollars through both.

Then look at the retirement outcome.

How We Compare the Strategies at FPP Financial

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

I don’t want to tell a business owner:

“Don’t use a SEP IRA.”

The SEP may give you a valuable current tax benefit.

I also don’t want to tell you:

“Keep putting every available dollar into tax-deferred accounts because the deduction feels good today.”

Run the entire timeline.

Show me today’s taxes.

Show me retirement taxes.

Show me the market assumptions.

Show me the withdrawals.

Show me the RMD assumptions.

Then run the IUL JUMP Strategy.

Show me the policy costs.

Show me the loans.

Show me the current 5% applicable loan rate.

Stress-test the contractual 6% maximum.

Lower the crediting assumption.

Remove a future JUMP.

Run both strategies deep into retirement.

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

Want to Compare Your SEP IRA With the IUL JUMP Strategy?

If you’re self-employed or own a business and you’re trying to figure out where your next retirement dollar should go, we can run the strategies side by side.

We’ll give the SEP IRA credit for the tax benefits and investment flexibility it actually provides.

We’ll account for the costs, underwriting requirements, loan mechanics and risks of the IUL.

Then we’ll compare projected retirement income under multiple assumptions.

If the SEP IRA produces the stronger result for your goals, you should be able to see it.

If the IUL JUMP Strategy produces substantially more projected retirement income, you should be able to see exactly where that difference came from.

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

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

Show me exactly where the difference comes from.

Let the math do the talking.

Schedule Your Tax-Free Retirement Strategy Meeting

Explore More

• IUL JUMP Strategy vs. Traditional IRA: What Happens When You Compare Retirement Income?
• What Is the IUL JUMP Strategy and How Does It Work?
• What Is a Matching Indexed Participating Loan in an IUL?

Disclosure

This material is for educational purposes only and is not intended as individualized investment, securities, tax, legal, retirement-plan or insurance advice. A SEP IRA is a tax-advantaged retirement arrangement and is fundamentally different from indexed universal life insurance. Eligibility, contribution limits, deductions, employee contribution requirements, distribution rules, investment options and other SEP IRA provisions are governed by applicable law and individual circumstances.

SEP IRA contributions may be deductible when applicable requirements are satisfied. Traditional SEP IRA contributions and earnings are generally subject to ordinary income taxation when distributed under current federal rules. Applicable required minimum distribution rules and other retirement-account requirements can change. Business owners with eligible employees may also have contribution obligations that should be evaluated before establishing or funding a SEP arrangement.

Market-based investments held through a SEP IRA can fluctuate in value and can lose principal. Past performance does not guarantee future results. Investment options, expenses and risks vary.

Indexed universal life insurance is permanent life insurance and is not a qualified retirement plan, IRA, brokerage account or direct investment in a market index. IUL policies do not own the underlying index securities and do not receive index dividends. Indexed interest is determined according to the policy’s applicable crediting terms, which may include caps, participation rates, spreads and other provisions.

A 0% indexed-crediting floor does not guarantee that overall IUL policy value cannot decline. Policy charges, cost of insurance, loan costs, withdrawals and other policy mechanics continue to apply. Caps, participation rates, spreads, loan rates and other nonguaranteed elements may change when permitted by the insurance contract.

Policy loans are actual policy indebtedness and generally accrue applicable loan charges. Loans and withdrawals can reduce policy values and death benefits and may increase lapse risk. Outstanding policy indebtedness generally reduces the net death benefit payable under the insurance contract.

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, Modified Endowment Contract status, policy lapse, surrender and other circumstances. A policy that lapses or is surrendered with gain and outstanding indebtedness may create taxable income.

Matching Indexed Participating Loans are policy loans, not employer contributions, business contributions, free matching dollars, bonuses, guaranteed gains or direct investments in a market index. Under the JUMP Strategy described here, Matching Indexed Participating Loan proceeds are modeled as being redeployed into the same policy as additional funding. The associated indebtedness and applicable loan costs remain part of the policy economics.

The JUMP Strategy is modeled with applicable loan charges carried forward during the accumulation design rather than requiring the client to pay those charges out of pocket each year. This does not eliminate the economic cost of borrowing, guarantee positive arbitrage or guarantee that policy values will remain sufficient to support outstanding indebtedness.

References to the $10,000 annual contribution example, JUMP progression, 6.87% historical indexed-crediting example, 1.87 percentage-point modeled positive spread, modeled effective results of 8.74%, 11.61%, 14.48% and 17.35%, current 5% loan rate, contractual maximum 6% loan rate, approximately 40% more projected retirement income, or up to approximately 300% more projected retirement income are illustrative and are not guarantees of future policy performance, positive arbitrage, policy durability, funding capacity, non-MEC status, future JUMP approval, death benefit or retirement income.

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 should not be interpreted as a claim that every SEP IRA comparison will produce the same result. A SEP IRA comparison must be modeled separately using actual contributions, applicable tax deductions, investment expenses, investment assumptions, tax assumptions, distribution strategy and other relevant factors.

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 and does not guarantee future retirement income.

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. Historical results do not predict future policy performance. The modeled effective JUMP results discussed above are not S&P 500 returns, indexed-crediting rates or guaranteed policy returns.

Positive arbitrage is not guaranteed. Periods in which indexed crediting is below the applicable loan cost can produce unfavorable loan economics. Policy charges and other expenses must also be considered when evaluating overall policy performance.

Future JUMPs and associated death-benefit increases are subject to carrier approval and applicable medical, financial, occupational and other underwriting requirements. Future approval is not guaranteed. Business income, employment, health and other circumstances can affect future underwriting. Failure to complete a planned future JUMP can materially change projected funding, policy values, indebtedness, death benefits and retirement-income results.

Policy-specific guarantees, nonguaranteed elements, loan provisions, loan rates, caps, participation rates, spreads, crediting methods, expenses, surrender provisions, MEC testing, lapse provisions and death-benefit provisions should be verified against current carrier-approved illustrations and the actual insurance contract.

Tax laws and retirement-plan rules can change, and the tax consequences of SEP IRA contributions, business deductions and life insurance transactions vary with individual circumstances. FPP Financial does not provide tax or legal advice. Business owners should consult qualified tax, legal and retirement-plan professionals regarding their individual circumstances.