How We Review IUL Policies

What we collect for every policy

Every IUL review starts from the carrier's own documents, never from marketing summaries or another site's numbers. We cite and quote only material the carrier publishes for consumers, never documents marked for producer or agent use only:

• The product guide: issue ages, minimum face amount, index accounts, crediting methods, riders and loan options.
• The current rate sheet: caps, participation rates, spreads and the fixed account rate, with the date the carrier put on it.
• Sample illustrations, run on the carrier's own software for a stated hypothetical buyer.
• Policy form and disclosure material where the carrier publishes it: guaranteed minimums, maximum charges and surrender charge schedules.

Every document is dated. The date on the rate sheet becomes the "as of" date printed next to the caps in the review. When a carrier does not publish a current rate publicly, we say rates are available on request rather than guess.

The specs we compare

Each review ends up with the same set of facts, in the same order, so policies can be compared line by line in our IUL comparison tool:

How we judge crediting

Crediting is how the company turns index movement into interest on your cash value.

• Caps. The most the index account can credit in a period. A higher cap is better, but only if the company keeps it high on existing policies. We pair every cap with the company's in-force record from our company method.
• Participation rates. The share of the index gain you are credited, up to the cap. A higher participation rate usually comes with a lower cap or an account fee, so we always show both numbers together. See participation rates.
• Floors. Most IUL accounts have a 0% floor, which means a negative index year credits zero instead of a loss. The floor protects the index credit, not the cash value. Cost of insurance and other charges still come out in a 0% year, so the cash value can go down. We say this in every review. See the IUL floor.
• Crediting methods. Annual point-to-point, monthly sum and monthly average accounts behave very differently in the same market. We name the method for each account and explain it in plain English.
• Index choice. We note whether the policy offers a plain S&P 500 account, other broad market indexes, and bank-built indexes.

Volatility-controlled indexes

Many IULs now offer indexes designed by banks that shift between stocks and cash or bonds to hold volatility at a target level. They often come with no cap or with very high participation rates. Our honest view:

• The high participation rate does not mean a higher expected credit. It reflects an index built to move less (see volatility-controlled indexes), and many of these indexes deduct a built-in fee from their own returns before your participation rate applies.
• Many are recent creations. Much of the history shown in marketing is back-tested, meaning calculated after the fact, not actually earned. We label back-tested results when we mention them.
• Under the NAIC's AG 49-A, these accounts cannot be illustrated at a higher rate than the standard S&P 500 benchmark account, apart from extra credit paid for by an explicit added charge. We note when an illustration relies on one.

Multipliers and bonuses

Some accounts multiply index credits or add a bonus. We always find out what pays for it. Many multipliers are funded by an extra annual charge on the account value, which is taken whether or not the index credits anything. In a 0% year you pay the charge and receive nothing. AG 49-A limits how much an illustration can show from bonuses and multipliers that are paid for with extra charges, and the NAIC tightened those limits again for policies sold on or after May 1, 2023, aiming at designs that paired uncapped volatility-controlled indexes with fixed bonuses. We describe each multiplier by what it costs, not only what it adds. See IUL bonuses and multipliers.

Charges and cost of insurance

Charges decide how much of each premium dollar actually reaches the cash value. For each policy we list, as far as the carrier publishes them:

• Premium load: a percentage taken from each premium payment.
• Per-policy fee: a flat monthly or annual charge.
• Per-thousand charge: a monthly charge for each $1,000 of face amount, often for a set number of years.
• Cost of insurance: the monthly charge for the pure death benefit, based on your age, health class and the amount of insurance above your cash value. We note both the current rates and that the company can raise them up to the guaranteed maximum in the policy. See cost of insurance.
• Rider and account charges: the cost of riders you choose and any charge on enhanced index accounts.

Where a carrier does not publish a charge, we say so rather than estimate it. Our fees and charges guide explains how these add up over time.

Loan provisions

Policy loans are how most IUL owners take income, so we review them closely:

• Fixed loans: the loaned amount earns a set rate close to the loan rate, so the cost is predictable.
• Participating (indexed) loans: the loaned amount stays in the index account. You can come out ahead when credits beat the loan rate and behind when they do not. In a 0% year you pay loan interest and earn nothing on that money.
• Loan rate terms: whether the loan rate is guaranteed, capped, or can change.
• Overloan protection: whether a rider can stop a heavily loaned policy from lapsing, what triggers it and what it costs.

Income from loans is generally not taxed while the policy stays in force and is not a modified endowment contract. If the policy lapses or is surrendered with a loan outstanding, the gain can become taxable income in that year, even though you receive no new cash. See IUL policy loans.

Riders and living benefits

We list every rider the carrier offers on the policy and note which are included and which cost extra. For accelerated death benefit riders covering chronic, critical and terminal illness, we explain how a claim is paid, whether the benefit is reduced at claim time and how it affects the remaining death benefit. See IUL living benefits.

Guarantees

We separate what the policy guarantees from what the company only intends to do:

• No-lapse guarantee: whether one exists, how long it lasts and what premium keeps it in effect. See no-lapse guarantee.
• Guaranteed minimum cap and floor: the worst crediting terms allowed.
• Guaranteed maximum charges: the highest cost of insurance and fees the contract allows.
• Guaranteed fixed account minimum and loan rate terms.

Surrender period

Surrender charges apply if you cancel or reduce the policy in its early years. We report how many years they last and how the charge steps down, and we note how the surrender value compares with the cash value in the early years. See IUL surrender charges.

How we read illustrations

An illustration is a projection of the policy's values under assumptions. It is required by state rules based on the NAIC's Life Insurance Illustrations Model Regulation, and for IUL it is governed by Actuarial Guideline 49-A (AG 49-A), adopted by the NAIC in 2020 for policies sold on or after December 14, 2020.

AG 49-A sets a maximum illustrated rate based on a benchmark account: the S&P 500, annual point-to-point, with a 0% floor, 100% participation and a cap. The benchmark's rate comes from applying its current cap to 25-year periods of past index history, and it cannot exceed 145% of the insurer's net investment earnings rate. No other account may illustrate at a higher rate than that benchmark, apart from extra credit paid for by an explicit added charge. It limits how much an illustration can show from policy loans, so the rate credited on loaned value cannot be assumed to beat the loan rate by more than 0.5 percentage points. Further revisions apply to policies sold on or after May 1, 2023 (tighter limits on other index accounts) and April 1, 2026 (limits on how historical index returns are shown). Our guide to AG 49-A explains the details.

Within those rules, here is what we do in every review:

• We always look at the guaranteed column. It shows the policy at its guaranteed minimum crediting and maximum charges. We report whether the policy stays in force under it and at what premium.
• We always look at a lower-rate scenario. Besides the carrier's maximum illustrated rate, we look at the policy at a lower hypothetical rate, because a policy that only works at the maximum is a fragile policy.
• We compare like with like. When we compare policies, we use the same hypothetical buyer, premium and death benefit design, and we state the rate used. Any hypothetical example is labeled as one and uses a rate at or below the AG 49-A maximum, never above 6.5%.
• We never present an illustrated rate as a projection of what you will earn.

See how to read an IUL illustration.

How our emphasis changes by policy type

Dates, states and updates

• Every cap and rate carries an "as of" date from the carrier document it came from.
• We refresh rates at least every 60 days, and sooner when a carrier announces a change.
• Features vary by state. Caps, riders, charges and even product names can differ by state, and New York often has its own versions. The policy issued in your state governs.
• Full reviews are rechecked at least twice a year, and the "Updated" date at the top shows the last full check.

Who writes and reviews

Every policy review is written and reviewed by a licensed strategist, currently James Forren Warren. Details are checked against the carrier's product guide, rate sheet and illustrations. See our editorial policy.

How we stay independent

Tax Free Wealth Plan is a licensed independent insurance agency. When a client buys a policy through us, the insurance company pays us a commission, and you never pay us a fee. IUL commissions vary by carrier, product and how the premium is structured, which is exactly why they play no part in our reviews. We do not rank on commission, no carrier pays for placement, and we review policies we cannot sell with the same method. See how we are paid and our advertising disclosure.

What a review cannot tell you

A review explains how a policy works for a typical buyer. It is not a recommendation for you. Your age, health, state, budget and goals change the answer, and only an illustration run for you shows your numbers. The policy and its disclosure documents always govern.

Corrections

Rates and features change. If you spot something out of date, tell us and we will verify it with the carrier and fix it.