A LiteStrats Publication
Education
Inside a Real IUL: What Two Years of Actual Policy Statements Show
Two consecutive annual statements from a real max-funded IUL, with the owner's details redacted: what got funded, what it cost, what the index credited, and what happened to the value while millions sat out on loan. Then what that same pattern projects to for a typical funding plan.
Does a max-funded IUL actually do what the whiteboard says? Here are two consecutive annual statements from a real policy in our book, issued in 2021 by one of our top carriers, with the owner’s details redacted. In its fourth year the owner put in $400 and the policy credited $229,867 of index interest while $890,525 sat out on loan. In its fifth year the owner funded $1.69 million and the accumulation value finished at $4.31 million. The numbers below come straight off the statements, and then we show what the same pattern projects to for a normal-sized funding plan.
Why We’re Publishing Real Statements
Almost everything written about IULs is hypothetical, for it or against it. Illustrations project, critics project, and nobody shows a statement. So the argument stays theoretical, and the surplus money that a real system would put to work keeps sitting idle in the meantime.
Statements end the theory argument. What follows is what one properly structured, max-funded policy actually did across two reporting periods, straight off the carrier’s paper.
Year One of the Statements: $400 in, $229,867 Credited
The 2024 to 2025 statement covers the policy’s fourth year. The owner contributed $400 all year. Essentially nothing. Here is what the policy did anyway:
- Started the year at $2,317,464.62 of accumulation value.
- Was charged $47,054.64 in total policy costs, about 2% of the value.
- Credited $229,867.33 of index interest, a 10.00% average for the year.
- Ended at $2,500,677.31, a net gain of $183,213 in a year with no real funding.
The detail that matters most sits one line lower: $890,524.73 was out on loan the whole time, over a third of the account.
The policy credited index interest on the full $2.3 million, including the $890,000 the owner had already borrowed out and put to work somewhere else. One pile of money, earning in two places at once.
That is the double dip, sitting right there on a statement line.
Year Two: $1.69 Million in, Value at $4.31 Million
The next statement, 2025 to 2026, shows what flexible funding looks like. After a $400 year, the owner pushed $1,692,200 in. The index averaged 8.64% and credited $222,229.26. The accumulation value finished at $4,311,588.79, and the outstanding loan grew to $2,716,833.39, because borrowing against the policy is how this owner funds what happens outside it.
Through both years the death benefit held above $15.1 million. The family’s protection never blinked while the money worked.
What It Costs, in the Open
Critics love the word “fees,” so here are the actual charges, unrounded:
| Charge | Year 4 | Year 5 |
|---|---|---|
| Premium charges | $18.00 | $54,846.50 |
| Monthly expense charges | $29,434.56 | $29,461.56 |
| Cost of insurance | $17,602.08 | $19,209.72 |
| Total | $47,054.64 | $103,517.78 |
Year 4’s total is 2.0% of the starting value. Year 5’s is higher only because a $1.69 million premium carries a one-time premium load on the way in. The insurance itself, the line critics point at, cost $19,209.72 in year 5. That is under half a percent of the account it sits on, for $15 million of coverage.
One caveat worth stating: this is one policy, one owner, and two index years that came in strong. A capped index can also credit a low year or a zero. The floor means zero is the floor, and the statement math above shows what the strong years do.
What the Same Pattern Projects To
You probably are not funding seven figures, so we ran the standard plan through LiteSim, the calculation engine behind every number we publish. This section is a projection, not a statement: modeled, not guaranteed, using the engine’s standard assumptions based on a 45-year-old funding $50,000 annually for 20 years, then drawing income at 66.
| Projected | |
|---|---|
| Accumulation value at 65 | $1,993,136 |
| Tax-free income from 66 | $159,451 per year |
| Total income through 95 | $4,783,527 |
| Death benefit remaining at 95 | $2,435,184 |
The assumptions: 7% average index credit, 5% policy loan rate, income drawn as policy loans. Same mechanics as the statements above, and the projection never lapses. By 95 the model shows $12.68 million of accumulation value still compounding with $11.12 million out on loan, which is the double dip from year 4, scaled up and run for decades. The income is loan proceeds, which is why it arrives tax-free under current law.
Frequently Asked Questions
Is This a Typical IUL Result?
No, and that is the point of showing statements instead of averages. This policy is properly structured and max-funded, which is what makes the math work. Most IULs are sold for the death benefit, underfunded, and never see mechanics like these. Structure decides the outcome.
Why Does the Owner Borrow Instead of Withdrawing?
A withdrawal stops those dollars from earning. A policy loan does not: the statements show interest credited on the full accumulation value, borrowed dollars included. The loan also arrives tax-free, and repayment runs on the owner’s schedule, not the carrier’s.
Whose Policy is This?
A client of ours, with every identifying detail redacted: name, policy number, and carrier. We publish the numbers because real statements are the evidence the IUL debate is missing, and we protect the person because that is non-negotiable.
Could the Policy Have a Bad Year?
Yes, and the design plans for it. A crash year credits zero instead of a loss, the floor. Charges still apply in a zero year, so the value can dip. The two years shown credited 10.00% and 8.64%, strong but not the ceiling, and nowhere near the floor.
Want to see your own version of the projection table, with your age and your numbers? That is exactly what a strategy call is for.
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