What Happens If You Need More Retirement Income Than Your IUL Was Designed to Provide?

You built the retirement plan around $100,000 a year.

Then retirement actually happened.

Property taxes went up.

Insurance got more expensive.

Groceries cost more.

You replaced the roof.

Healthcare started taking a bigger bite.

And the $100,000 that looked comfortable on the original retirement projection doesn’t feel like $100,000 anymore.

Now you’re looking at your indexed universal life policy and thinking:

“Can I just take more?”

Maybe the policy contract permits additional access to available policy values.

But that’s not the question I’d stop at.

The more useful question is:

“What happens to the rest of my retirement if I take more?”

The Policy Was Designed Around a Set of Assumptions

When an IUL is modeled for retirement income, the projection isn’t created from one number.

It’s built from a group of assumptions working together.

Those can include:

• How much you contribute
• How long you fund the policy
• When retirement income begins
• How much income you access
• How long that income is modeled to continue
• Indexed-crediting assumptions
• Policy charges
• Cost of insurance
• Policy-loan mechanics
• Applicable loan rates
• Death-benefit structure
• Future policy changes

Change the retirement-income amount and you’ve changed one of the major assumptions.

So rerun the policy.

“Can I Take More?” Is Not the Same as “Can I Sustainably Take More?”

This distinction is huge.

A policy may have enough available value for you to access another $20,000, $50,000 or more.

That doesn’t tell you what the transaction does twenty years later.

You don’t want to discover at 87 that the extra income you started taking at 67 created a problem you never modeled.

Imagine Your Original Plan Was $100,000 Per Year

Now you decide you need:

$125,000.

That’s another:

$25,000 per year.

For one year, that may not sound dramatic.

But if you take the extra $25,000 for 20 years, that’s:

$500,000 of additional gross distributions.

That’s simple arithmetic before considering the timing of transactions, policy-loan costs, crediting, policy charges, taxes where applicable, or the effect on policy values.

A temporary increase and a permanent increase are two very different decisions.

First Ask Why You Need More

Not all retirement-income shortfalls are the same.

Maybe your lifestyle permanently costs more than expected.

Maybe inflation has changed your monthly budget.

Maybe one spouse lost another source of income.

Maybe you have a healthcare expense.

Maybe the kids need help.

Maybe you want to buy a car.

Maybe you need $75,000 for a one-time home repair.

Those situations shouldn’t automatically produce the same IUL transaction.

One-Time Need or Permanent Income Increase?

This is one of the first things I’d separate.

Suppose you normally access:

$100,000 per year.

Then you need another $50,000 this year.

That’s different from deciding:

“From now on, I need $150,000 every year.”

The second decision can place much more pressure on the long-term policy projection.

Run the Original Income and the New Income Side by Side

Let’s use a simple hypothetical comparison:

Those are simple hypothetical arithmetic totals.

They aren’t promises that an IUL can support any of those amounts.

The point is to see how quickly a seemingly modest annual increase becomes a large cumulative difference.

Then Look at What the Extra Income Does to the Policy

For each scenario, I’d want to see:

• Policy value
• Cash surrender value
• Outstanding policy indebtedness
• Applicable loan costs
• Projected net death benefit
• Policy status at advanced ages
• Cumulative retirement income

And I wouldn’t stop at age 80.

Run it to 90.

95.

And beyond where appropriate.

The Extra $25,000 Has to Come From Somewhere

This sounds obvious, but it’s easy to miss when looking at a large policy value.

If you’re accessing more policy value, the long-term economics change.

If policy loans are being used for retirement access, larger distributions can mean greater policy indebtedness than the original projection showed.

That can mean more loan cost over time.

And outstanding indebtedness can affect policy values and the net death benefit.

The Bigger Problem May Not Show Up Immediately

That’s what makes this dangerous to eyeball.

You could increase retirement income today and still see a large policy value next year.

Everything feels fine.

But retirement isn’t a one-year test.

The question is what the additional distributions do after ten, twenty or thirty years.

What If You Only Need More for Three Years?

That’s worth modeling separately.

Maybe you need:

$125,000 for three years

and then expect to return to:

$100,000.

That can create a very different result from taking $125,000 every year for the rest of retirement.

Again, run it.

What If Inflation Is the Problem?

Suppose you retired expecting $100,000 to cover your lifestyle.

Ten years later, you need $125,000 just to maintain something close to the same standard of living.

That isn’t lifestyle creep in the usual sense.

Your dollars simply don’t buy what they used to.

That’s why a retirement-income illustration that shows one flat nominal dollar amount for decades should be tested against increasing spending needs.

What If Healthcare Is the Problem?

This one hits differently.

You may happily postpone a vacation.

You may decide not to buy the new car.

Healthcare isn’t always optional.

If one spouse needs significantly more care, retirement spending can change fast.

That’s when you want to know exactly how much flexibility exists across the entire retirement plan.

What If You Want to Help Your Kids?

This creates one of the hardest emotional decisions.

Your adult child calls.

They need help with a house.

A business.

A divorce.

Medical bills.

Maybe it’s $25,000.

Maybe it’s $100,000.

Your first instinct is:

“Of course we’ll help.”

Then later that night:

“What if we give away too much and end up needing their help later?”

That’s the contradiction.

You want to help your family without turning yourself into their future financial responsibility.

Before Increasing the IUL Distribution, Look at Every Retirement Bucket

The IUL shouldn’t be evaluated in isolation.

You may also have:

• Cash reserves
• A taxable brokerage account
• A Traditional IRA
• A 401(k)
• A Roth IRA
• Social Security
• A pension
• Rental income
• Other assets

The best source for an additional retirement expense can change based on the amount, timing, taxes, market conditions and the long-term job each asset is supposed to perform.

Taking More From the IUL May Avoid Selling Other Assets, but There Is Still a Cost

If market investments are down sharply, you may not want to liquidate more of them than necessary.

An IUL can potentially provide another source of policy value.

That flexibility can be useful.

But if the transaction is a policy loan, it creates or increases indebtedness and carries applicable loan economics.

So don’t call it free liquidity.

Now the Policy-Loan Rate Becomes More Important

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

5%.

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

6%.

If you’re considering materially increasing retirement distributions, I would model both.

Why Stress-Test the 6% Maximum?

Because an income increase that looks manageable at a 5% applicable loan rate may look different if the relevant rate reaches the contractual maximum.

Don’t find that out twenty years later.

Put it into the projection now.

And Don’t Assume Positive Arbitrage Will Always Carry the Extra Distribution

Suppose the applicable indexed-crediting result is:

8%.

And the applicable loan cost is:

5%.

The simplified relationship is:

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

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

But it isn’t guaranteed.

What If the Crediting Result Is 0%?

At 0% applicable indexed crediting and a 5% applicable loan cost, the simplified relationship becomes:

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

Now imagine that happening while you’ve also increased the amount you’re accessing for retirement.

That’s why the higher-income scenario needs a bad-year stress test.

The 0% Floor Doesn’t Make a Bigger Distribution Harmless

The 0% floor applies to the applicable indexed-crediting calculation in the example we’re discussing.

It doesn’t stop:

• Cost of insurance
• Administrative or other policy charges
• Applicable loan costs
• Retirement distributions

So policy value can still decline during a 0% indexed-crediting period.

Now Put Several Weak Years Together

If you need more income than originally planned, don’t test the increase only under favorable assumptions.

Run:

0%.

Another weak year.

Another 0% year.

Keep the higher distribution going.

Then look at the policy at 85, 90 and 95.

The IUL JUMP Strategy Adds Another Layer to the Math

The accumulation design we’re discussing uses a Matching Indexed Participating Loan.

In the standard example, the client contributes:

$10,000 per year.

Beginning in policy Year 3, Matching Indexed Participating Loan activity begins.

The matching amount is created through policy-loan activity and redeployed into the same policy as additional funding.

The loan-funded value remains participating under the applicable indexed-crediting strategy in the example.

The associated policy indebtedness and applicable loan cost still exist.

Here’s the Standard JUMP Funding Example

The client isn’t writing a $60,000 check in Year 11.

In this example, the client’s out-of-pocket contribution remains:

$10,000.

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

That creates policy indebtedness.

It isn’t a free contribution.

Why Does the Accumulation Design Matter Once You Need More Retirement Income?

Because you need to know what the policy looks like when retirement begins.

How much policy value exists?

How much indebtedness exists?

What are the applicable loan costs?

How much death benefit remains?

Those starting numbers affect how much flexibility the policy may have when your spending changes later.

Future JUMPs Are Not Guaranteed

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

3, 5, 7, 9 and 11.

Each future JUMP requires new underwriting and approval for the applicable death-benefit increase.

Health, income, employment, existing insurance, driving history, occupation, hazardous duties, risky hobbies and other underwriting factors can affect future approval.

So if you’re still in accumulation and modeling higher future retirement income, don’t assume every future JUMP will automatically occur.

Run the “No More JUMPs” Scenario Too

If the retirement-income target only works because every future JUMP is assumed to be approved, you need to see what happens without them.

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

But future increases still shouldn’t be treated as guaranteed.

What About the Historical 6.87% Example?

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

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

The analysis applied the example strategy’s:

10% cap

and:

0% indexed-crediting floor.

Negative annual price changes were replaced by 0% for purposes of the 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%.

That Historical Average Doesn’t Give You Permission to Spend More

A historical average is not a retirement-income limit.

It doesn’t tell you what your actual policy will credit.

It doesn’t tell you what your policy charges will be.

And it doesn’t tell you how much income your individual policy can sustain.

It is one modeling input, not the answer.

The Simplified Historical Spread Was 1.87 Percentage Points

Using the current 5% applicable loan rate:

6.87% – 5.00% = 1.87 percentage points.

That’s the simplified favorable modeled spread in that historical example.

It is not guaranteed.

And a larger retirement distribution shouldn’t be justified by assuming that favorable spread will occur every year.

What About the Higher JUMP Modeling Figures?

Under assumptions used in one JUMP model, 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 IUL indexed-crediting rates.

They aren’t guaranteed policy returns.

They are modeled effective results under assumptions used in that analysis, before accounting for applicable policy charges and other factors.

Don’t Look at 17.35% and Decide You Can Take 17% Out

Those are two completely different concepts.

A modeled effective strategy result is not a safe withdrawal rate.

It is not an annual indexed-crediting rate.

And it doesn’t mean you can withdraw the same percentage without changing the policy’s long-term economics.

What About the Approximately 12% Distribution Used in JUMP Modeling?

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.

Now imagine the policy was modeled around that level and you suddenly need 14%, 15% or more.

Don’t extrapolate.

Run a new projection.

More Income Now Can Mean Less Flexibility Later

This is the tradeoff.

The extra $25,000 feels useful today.

It may be necessary today.

But if accessing it creates additional long-term pressure on policy values or indebtedness, you may have less room later.

That’s why retirement income should be evaluated across decades, not one calendar year.

It Can Also Reduce the Legacy

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

If you access more money during retirement, the projected amount eventually left to beneficiaries can change.

That may be exactly what you want.

You bought the policy partly to support retirement, and you intend to use it.

Fine.

But make the trade consciously.

“I Want to Spend It” and “I Want to Leave It” Can Both Be True

This is where retirement planning gets emotional.

You may say:

“We worked for this money. We should enjoy it.”

Then immediately think:

“I still want the kids to inherit something.”

Those thoughts aren’t contradictory.

They simply mean the model needs to show both outcomes.

And There Is a Bigger Fear Underneath It

The real fear usually isn’t that you’ll take an extra $20,000 this year.

It’s this:

“What if this becomes the new normal?”

Then:

“What if we keep needing more every year?”

Then:

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

The Independence Question Shows Up Late at Night

You want to enjoy the money.

You want to help your family.

But you also don’t want to reach your late 80s with too few options.

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

“We should be able to handle this ourselves.”

That’s why the math has to go further than next year’s income.

Now Put the Up-to-300% Comparison Through the Higher-Income Test

In certain modeled comparisons we’ve evaluated, the IUL JUMP Strategy has produced up to approximately 300% more projected retirement income than the 401(k), Traditional IRA, or comparable tax-deferred retirement strategy being evaluated.

That’s projected retirement income.

Not 300% more investment return.

And it isn’t guaranteed.

If you need more income than the original JUMP projection showed, rerun the comparison.

Don’t Assume the 300% Difference Automatically Scales Up

This is critical.

If one model shows $100,000 from one strategy and a much larger amount from another under a particular set of assumptions, you cannot simply increase the desired distribution and assume the same relative advantage remains.

Changing the distribution amount changes the model.

So rerun:

• Policy values
• Taxes
• Loan mechanics
• Loan costs
• Indexed-crediting assumptions
• Market assumptions
• Policy charges
• Distribution timing
• Longevity
• Legacy values

Make Both Strategies Fund the Same Lifestyle

If you’re comparing the IUL JUMP Strategy with a 401(k) or Traditional IRA, give them the same retirement problem.

If you need $125,000 of spendable retirement income, model $125,000 of spendable retirement income.

Don’t compare a gross tax-deferred distribution with a potentially non-taxable policy-loan amount as though the numbers are automatically equivalent.

Account for the applicable tax assumptions.

Then compare how long each strategy is projected to support the spending goal.

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 is also model-specific and not guaranteed.

If your desired retirement income increases, both IUL designs should be rerun using the same higher distribution requirement.

Don’t assume the original percentage difference stays fixed.

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

If a model shows up to approximately 300% more projected retirement income, ask:

“Does the advantage still hold if my retirement gets more expensive than planned?”

Then make the strategy answer.

Show me exactly where the difference comes from.

Here’s the Higher-Income Stress Test I’d Want to See

1. Start with the current actual policy values.
2. Run the original retirement-income amount.
3. Increase the annual distribution modestly.
4. Increase it again.
5. Run a one-time large expense instead of a permanent increase.
6. Run a three-year temporary increase.
7. Compare cumulative retirement income.
8. Compare policy values.
9. Compare cash surrender values.
10. Compare outstanding policy indebtedness.
11. Compare projected net death benefit.
12. Run the current applicable 5% loan rate.
13. Run the contractual maximum 6% loan rate.
14. Add multiple weak and 0% indexed-crediting periods.
15. Put those weak periods early in retirement.
16. Run no additional future JUMPs.
17. Add a large late-life expense.
18. Extend the projection through age 95 and beyond.

Then Ask One More Question

“What would I have to give up to make the higher income work?”

Maybe the answer is:

Nothing material under the assumptions tested.

Maybe it’s:

A smaller projected death benefit.

Maybe it’s:

Less flexibility later.

Maybe it’s:

A higher risk of policy pressure under unfavorable conditions.

Maybe the updated projection says the higher amount isn’t something you’d be comfortable relying on.

Those are the answers you want before changing the distribution.

The Worst Way to Solve a Retirement-Income Shortfall

Look at the policy value.

See a big number.

Take more.

Repeat next year.

Never rerun the projection.

That’s not a strategy.

That’s spending from an asset without checking what the spending is doing to it.

The Better Question Is Not “How Much Can I Get?”

Ask:

“How much can I access while keeping the rest of the retirement plan within a range I’m comfortable with?”

That’s a completely different mindset.

The Bottom Line

What happens if you need more retirement income than your IUL was designed to provide?

You don’t automatically have a crisis.

And you don’t automatically have permission to increase the distribution indefinitely.

Rerun the policy.

Separate a one-time expense from a permanent lifestyle increase.

Look at policy values.

Look at outstanding indebtedness.

Look at loan costs.

Look at policy charges.

Look at the projected net death benefit.

Stress weak crediting years.

Stress the contractual maximum loan rate.

Then take the projection through age 95 and beyond.

The real question isn’t:

“Can I get another $25,000 out?”

It’s:

“What does that extra $25,000 do to everything that comes after it?”

How We Test a Higher Retirement-Income Need at FPP Financial

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

We’ll start with the income your policy was originally designed to provide.

Then we’ll increase it.

We’ll test a one-time expense.

We’ll test a temporary increase.

We’ll test a permanent increase.

We’ll look at cumulative retirement income.

We’ll look at policy values.

We’ll look at outstanding policy indebtedness.

We’ll look at applicable policy charges.

We’ll look at projected net death benefit.

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

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

We’ll add weak and 0% indexed-crediting periods.

We’ll run the strategy without assuming additional future JUMPs.

Then we’ll extend the projection through advanced ages.

You don’t need someone to tell you, “Sure, take more.”

You need to see what taking more actually does.

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

Need More Retirement Income Than You Originally Planned?

Let’s run the new number.

Not the number you thought you would need ten years ago.

The number your retirement actually requires now.

In certain modeled comparisons we’ve evaluated, the IUL JUMP Strategy has produced up to approximately 300% more projected retirement income than the 401(k), Traditional IRA, or comparable tax-deferred retirement strategy being evaluated.

In certain modeled comparisons, it has also produced approximately 40% more projected retirement income than the traditional IUL structure being compared.

Those are modeled results, not guarantees.

And if your income target changes, the comparison needs to be rerun.

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

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

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

Show me exactly where the difference comes from.

Let the math do the talking.

Schedule Your Tax-Free Retirement Strategy Meeting

Explore More

• How Much Retirement Income Can an IUL Produce?
• Should You Take the Same Amount From Your IUL Every Year in Retirement?
• How to Stress-Test an IUL Before You Use It for Retirement

Disclosure

This material is for educational purposes only and is not intended as individualized investment, securities, tax, legal, underwriting, retirement, or insurance advice. Indexed universal life insurance is permanent life insurance and is not a qualified retirement plan, IRA, brokerage account, mutual fund, index fund, savings account, or direct investment in a market index.

The ability to access additional policy values does not establish that a larger retirement distribution is sustainable or appropriate. Increasing distributions can materially affect policy values, cash surrender value, outstanding indebtedness, policy-loan costs, net death benefit, policy durability, lapse risk, and future financial flexibility.

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

Examples involving $100,000, $125,000, $150,000, $25,000, $50,000, $75,000, or other retirement-income amounts are hypothetical arithmetic examples only. They do not establish what an actual policy can sustainably provide or what any individual should access.

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 for any particular period. Increasing a modeled distribution above that level does not imply that a policy can support the higher amount.

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, retirement 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.

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

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

With the policy structure discussed in this article, the applicable loan rate is currently 5%, with a contractual maximum loan rate of 6% for the applicable loan feature. The current applicable rate should not be interpreted as a guarantee that the rate will remain at 5%. Current and maximum loan provisions should be verified against current approved policy information and the actual insurance contract.

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

Positive arbitrage is not guaranteed. Periods in which applicable indexed crediting is below the applicable policy-loan cost can create unfavorable loan economics. Prolonged unfavorable loan economics combined with larger retirement distributions and policy charges can place additional pressure on policy values and long-term policy durability.

The historical 6.87% indexed-crediting example discussed in this article is based on an analysis of annual S&P 500 price changes from 2006 through 2020, excluding dividends, and applying the stated 10% cap and 0% indexed-crediting floor. Negative annual price changes were replaced by 0% and positive annual price changes above 10% were capped at 10% for purposes of that historical analysis. The resulting annual capped-and-floored figures averaged approximately 6.87%. Historical results do not predict future policy performance and should not be interpreted as a guaranteed future indexed-crediting rate, compound annual growth rate, net policy return, or historical total return of the S&P 500.

The simplified 1.87-percentage-point modeled positive spread represents the mathematical difference between the 6.87% historical indexed-crediting result used in the referenced model and the current 5% applicable policy-loan rate. It is not a representation of net policy return after cost of insurance, administrative expenses, other policy charges, withdrawals, distributions, or other factors and is not guaranteed to occur.

The modeled effective JUMP results of approximately 8.74%, 11.61%, 14.48%, and 17.35% are not S&P 500 returns, indexed-crediting rates, compound annual growth rates, sustainable withdrawal rates, net returns after policy charges, participation rates, cap rates, or guaranteed policy returns. They are modeled effective results under assumptions used in the referenced JUMP analysis, before accounting for applicable policy charges and other factors.

Future JUMPs and associated death-benefit increases are subject to future underwriting and approval. Initial policy approval and prior successful JUMPs do not guarantee future increases. Health, income, employment, existing insurance, driving history, occupation, hazardous job duties, risky hobbies, and other applicable underwriting factors may affect eligibility for additional coverage.

Death-benefit increases associated with planned JUMPs are designed to create additional funding capacity under the intended policy design while managing applicable MEC limits. Increasing death benefit does not by itself guarantee non-MEC status. Actual policy design, premium funding, tax rules, underwriting approval, applicable procedures, and contract provisions control.

Under the strategy mechanics described, failure to qualify for a future JUMP does not necessarily mean prior successful JUMPs or the previously achieved matching-loan level automatically disappear. Actual policy rules govern each case, and retirement-income projections should be updated when future JUMP assumptions change.

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

Policy values from a properly structured and maintained non-MEC life insurance policy may potentially be accessed through withdrawals to basis and policy loans without current income taxation under current federal rules, subject to applicable requirements. Tax treatment can be affected by basis, MEC status, policy lapse, surrender, outstanding indebtedness, and other circumstances.

The up-to-approximately-300% projected retirement-income result cited in this article refers to certain modeled comparisons involving the IUL JUMP Strategy and a 401(k), Traditional IRA, or comparable tax-deferred retirement strategy. It is not a universal result or guarantee and should not be interpreted as 300% more investment return, indexed interest, policy-loan arbitrage, net policy return, sustainable withdrawal rate, guaranteed lifetime income, or S&P 500 performance. Increasing the desired retirement-income amount, changing taxes, market assumptions, indexed-crediting results, policy-loan mechanics, loan rates, policy charges, future JUMPs, retirement timing, longevity, or other assumptions can materially alter the comparison. An original modeled percentage advantage should not be assumed to remain unchanged when the retirement-income target is increased.

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. A higher retirement-income requirement can materially change the projected comparison and should be modeled using the same assumptions for both policy designs.

Comparisons among possible sources of additional retirement income should account for applicable taxes, market conditions, liquidity, policy-loan economics, policy charges, investment risk, account purpose, legacy objectives, and other relevant factors. Accessing additional IUL policy value is not automatically preferable to using cash, qualified accounts, taxable investments, or other available assets.

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

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