The IUL Experiment with Andy Panko

Summary

---

Podcast Summary: AICPA PFP – "The IUL Experiment with Andy Panko"

Release Date: July 10, 2026
Host: Kari Sinnett (AICPA & CIMA)
Guest: Andy Panko, CFP®, EA, fee-only financial advisor & educator

---

Episode Overview

This episode dives into the intricate world of Indexed Universal Life Insurance (IUL) with financial advisor Andy Panko. Known for his transparency and data-driven approach, Andy discusses his ongoing "IUL Experiment," in which he purchased an IUL policy, tracks its real-world performance, and aims to provide unbiased insights to both consumers and fellow advisors. The conversation systematically breaks down how IULs work, debunks common sales narratives, explores real costs, and outlines both risks and appropriate planning considerations.

---

Key Discussion Points & Insights

1. What Is an Indexed Universal Life Insurance Policy?

[02:33 – 05:03]

• Permanent vs. Term Life: IUL is permanent coverage, intended to stay in force for a lifetime if premiums are paid.
• Flexibility: Unlike term and whole life, universal life (including IUL) is flexible. You can generally pay more or less each year, as long as minimums are met.
• Interest Crediting: IUL cash value growth is linked to market indices (commonly S&P 500) via options, not direct investment.
  • Floors & Caps: Downside risk is floored at 0%, so negative market years credit no interest (but not negative returns to the cash part). Upside is frequently capped or subject to participation rates.
• Notable Quote:

  "The index aspect... refers to how the interest is credited to the cash value that builds up within the policy... you'll never get less than zero interest, even when the market's down. You get floored out at zero. On the upside, there's often some combination of a cap... or participation rate..." — Andy Panko [04:25]

2. Market Declines & Impact on Cash Value

[05:03 – 06:50]

• Interest credited never drops below 0%, but fees, insurance charges, and admin costs are still withdrawn annually—so cash value can decline during zero-return years due to costs.
• Memorable Clarification:

  "Anything that says it 'can't lose money'... is just categorically false. It is absolutely true the interest you get credited will never be less than zero... But fees and costs will still come out.” — Andy Panko [05:41]

3. Genesis of the IUL Experiment

[07:41 – 10:00]

• Frustrated with sales hype & lack of real-world data, Andy bought and published results for his own IUL.
  • No public registry of returns; each policy is a private contract and differs in details.
  • His benchmark for “success”: Whether actual returns and fees match the carrier’s original illustration—not whether the IUL outperforms investments like equities.
• Notable Quote:

  “This is one policy out of thousands out there that all have their own unique twists and turns. Mine won’t necessarily be indicative of yours... What I’m deeming a ‘success’ is whether the returns and fees... track closely to what was originally illustrated.” — Andy Panko [09:16]

4. How Andy Structured His IUL Experiment

[10:23 – 12:34]

• Blended allocation: S&P 500 (point-to-point), plus “target volatility” multi-asset indices, across different crediting periods (1, 2, and 3 years) for data sampling.
• S&P segment uses 100% participation with a 10% cap (at time of purchase), subject to change.

5. Tax Deferral and Retirement Income via IUL—Promises & Realities

[13:08 – 14:59]

• Interest accumulation is not taxed annually—taxation occurs only on distributions above premiums paid.
• Loan strategy is touted as a “tax-free” withdrawal method: Money borrowed is not income and is offset against death benefit at death.
• Serious caveats:
  • Loans are not “becoming your own bank”—the insurance company is the lender, collecting interest.
  • If the policy lapses with an outstanding loan, the excess above premiums paid becomes taxable ordinary income (“tax bomb”).
• “Be Your Own Bank” Mythbusting:

  "The whole 'bank on yourself' is just categorically slop. It is no different than banking on your house. ...The loan you’re taking against it is money coming from the insurance company. You’re paying them interest..." — Andy Panko [14:31]

6. Loan Mechanics & Risks

[15:04 – 18:02]

• Current policy loan rates are about 5% (lower than other common loan types).
• You can borrow up to 80–90% of cash value, not 100%, leaving a buffer.
• If cash value dwindles due to loan interest and fees outpacing credited interest, policy lapses can cause a big tax event.
• Most well-structured policies have “overloan protection riders” to prevent total policy collapse, but this often greatly reduces the death benefit.

7. Alternatives to IUL for Tax Deferral & Downside Risk

[18:42 – 20:23]

• If a client’s goal is “indexing” investment with downside protection outside of life insurance:
  • Fixed Indexed Annuities: Investment returns with similar structures, minus the life insurance.
  • Structured Notes: Bank products with various risk/return profiles.
  • Buffered or Defined-Outcome ETFs: Offer “floors” with different participation rates and capping mechanisms.
• For tax deferral: Maximize typical qualified retirement accounts (IRA/Roth/etc).

8. Actual Costs and Realities of Fees

[20:23 – 22:17]

• Max-funded IULs (max funding allowed per IRS) reduce cost ratios, but early year fees are very high:
  • 1st year fees in Andy's policy: ~17% of the premium/cash value.
  • Fees rapidly decrease over time (e.g., 9% by year 2, below 1% by year 10, 0.5% from year 15+).
• Memorable Fee Disclosure:

  "The first year all-in fees are about 17%... By year 10 they get down to sub 1%. ... Do not buy an IUL if you plan on closing or taking it out in one year, two years, because the fees are insanely high." — Andy Panko [21:14–22:12]

---

Thoughtful Conversation Starters for Clients

[22:23 – 24:37]

• Questions for clients and planners:
  1. Do you have an authentic need for permanent life insurance?
     • If not, IUL isn’t appropriate.
  2. Do you fully understand what you’re buying—including all contractual costs and the ability for insurers to change fees/caps over time?
  3. Have you reviewed the range of reasonable outcomes (not just the best-case illustration)? Are you comfortable with that range?
  4. Can you commit to funding the policy over a very long term (10+ years, ideally decades)?
  • Memorable Perspective:

    "This is a marriage. Don’t buy this unless you have easily 10+ years of assumed commitment…it’s expensive to get into it and you have to plan on having it for a long time." — Andy Panko & Kari Sinnett [24:37]

---

Notable Quotes & Timestamps

• “Anything that says it ‘can’t lose money’... is just categorically false.” — Andy Panko [05:41]
• “What I’m deeming a ‘success’ is whether the returns and fees... track closely to what was originally illustrated.” — Andy Panko [09:16]
• “The whole ‘bank on yourself’ is just categorically slop. ...You’re paying [the insurance company] interest…” — Andy Panko [14:31]
• “The first year all-in fees are about 17%... By year 10 they get down to sub 1%.” — Andy Panko [21:14]
• “This is a marriage. Don’t buy this unless you have easily 10+ years of assumed commitment...” — Andy Panko [24:44]

---

Conclusion

This episode provides a nuanced, step-by-step exploration of IULs—what they actually do versus what’s often “sold.” Andy Panko’s real-world experiment gives planners and consumers a rare, transparent look at returns, costs, and risks, highlighting why a detailed, long-term, and needs-based approach is vital.
Planners are encouraged to probe clients’ true insurance needs, understanding of the product, capacity for commitment, and whether alternatives may better fit their objectives.

---

Transcript

[A]

This is your Personal Financial Planning Podcast Indexed Universal Life Insurance. It's one of the most complex, sometimes controversial tools in financial planning. Sometimes promoted as tax free retirement income, it's often wrapped in promises of market upside with no downside. But what happens when you strip away the sales pitch and actually put one of these policies to the test? Well, that's exactly what today's guest has done, creating one of the most transparent long term case studies in the profession. Today we're joined by Andy Panko, CFP Enrolled Agent. Andy is a fee only financial advisor and educator known for his retirement planning education platform, podcast and YouTube channel. He's also the mind behind the IUL experiment where he purchased and documented his own indexed universal life policy to track its real world performance over decades. His goal? To give financial planners and clients an honest, unbiased view of what these policies can and can't deliver. Welcome to the AICPA's Personal Financial Planning Podcast. I'm Kari Sinnett. As the Manager of the Financial Planning Credential exclusively available to CPAs, my role is to keep you informed, educated and connected to a premier community of thought leaders delivering trusted financial planning. We explore the full range of planning topics and the current events shaping our profession. If you're a CPA financial planner or simply want an inside look at today's topic of demystifying indexed universal life insurance, this podcast is for you. And if you want to dive deeper into these topics and equip yourself with practical tools, visit aicpa.org PfP AICPA members can join the PfP section for 269 per year to access a full library of resources designed to support you in delivering exceptional financial planning. Andy, welcome to the show. Let me just set the stage with our opening question for planners who may not work with life insurance regularly. Can you start by explaining what an indexed universal life insurance policy is and how it is typically positioned in the marketplace?

[B]

Sure, of course. First, thank you for having me. I'm happy to be here and talk about what I think is a very important topic for consumers and advisors alike, so try to keep this as high level as possible. There's a lot of devil in details here, but Index Universal Life is a form of permanent life insurance, not term where you pay for 10 years, 20 years policies over if you don't die in the interim and get paid out the death benefit with any form of permanent policy. As the name implies, as long as you keep the policy in force and continue paying the necessary amount of premiums, the policy will be there until you die. Or sometimes it matures at age 120 or something, but generally until you die. Now, within the permanent life insurance subset of insurance, there's a few different types. There's traditional sort of whole life where it's kind of steady Eddie. The, the amounts you pay are contractually known up front. So long as you pay those, you will always have the benefit. There's not risk of you needing to pay more down the road, et cetera. With the universal life chassis, there's a few different subflavors of that. It's more flexible. You can pay more, you can pay less. Any given year, any given month, whatever, there's going to be a minimum amount you need to pay to keep it enforced. And that could go up over time, depending how the policy performs. But the point is, it's flexible. Technically it is annually renewable one year term. So in fact, every year you're buying new term insurance for the next year. And when you first get it underwritten and in place, you are guaranteed to be able to qualify, to keep renewing it every year. You don't need like a, you know, underwriting, re. Underwriting every year. The, the index aspect of it refers to how the interest is credited to the cash value that builds up within the policy. There's a few different ways interest can be credited. There's fixed, you know, traditional, just universal life, where you get a fixed rate of interest declared by the carrier every year. There's variable universal life where the cash value is invested in mutual fund, like investments that could invest in the stock market, bond market, whatever. So the values can go up, can go down. Then there's indexed universal life, which is what we're talking about, where it's not actually invested in the markets. Instead, the insurance company is buying options behind the scenes to get you indirect exposure to the return of markets like the S&P 500. But you'll never get less than zero interest. Even when the market's down. You get floored out at zero. On the upside, there's often some combination of a cap, an absolute cap you can hit. There could be a participation rate, meaning you only get like 80% of whatever the return is of the S P and things like that. So that, that's kind of it in a nutshell. Again, as long as you continue to pay whatever the premium, minimum premiums necessary to keep it in force, you'll have this death benefit until you eventually die.

[A]

All right, Andy, let me see if I can summarize this. IULs are a subset of permanent life Insurance that in general will usually allow you some sort of participation in the market. And most policies are going to have a bottom return of zero. So if the market goes down, well, your cash value portion will show a 0% return. So now that we have an idea of what it is, what happens in that down market? I'm sure there's cost to the insurance. Does that impact the cash value?

[B]

Yeah, definitely. And this is one of the most misunderstood and misused sort of sales claims about it is anything that says it can't lose money or never lose money is just categorically false. It is absolutely true that the interest you get credited will never be less than zero. Even in down markets. To your point, there's still fees and other costs that come out because this is first and foremost, this is life insurance and there should rightfully be a cost to carry that life insurance. The cash value accumulation is actually a secondary feature. It's what a lot of people focus on when they sell it, unfortunately. But it's still first and foremost life insurance. So. So to your point, in years where the market is down, you will get zero interest. You will get negative interest on your cash value, but fees and costs will still come out. If nothing else, you have cost of insurance charges there in the early years of the policy. There's also like premium charges. There's some other fees that can last up to roughly 10 years. There's also just nickel and dime, sort of like admin fee of 50 bucks a year or something like that. But yeah, those things still come out even when you get zero interest. And so that means your cash value actually decline, decrease a little bit due to the fees, not directly due to the market.

[A]

And that helps us set the stage to really understand what we're talking about. Just at first blush, there might be a slice of the investing public that is like, well, I want to limit my risk, but I still want to participate in markets even if that's a reduced participation. Let me get to your involvement in this because I love this idea. I'm going to put all my cards on the table here. I had a friend who said, I'm thinking about an IUL and I'm going to be my own bank quote and things like that. So I love what you're doing with the IUL experiment. What led you to create the IUL experiment? And why did you feel it was important to buy and track your own policy rather than just analyze them from the outside?

[B]

It started from having lots of back and forth with people in online forums, Facebook groups, LinkedIn, et cetera, who were selling these things and making these claims that I just thought like this doesn't sound accurate. It this sounds way too rosy what you're saying, like what you're saying could theoretically happen. The chances of it happening I don't think are likely. And so the more I got engaged with people, often overly zealous people who were selling them, the more I was told you don't know what you're talking about, you don't sell insurance, what do you know, etc. Etc. And I was like, I think I do. Like the more I researched and dug into it, the more I think I understand this well enough to make an informed decision if nothing else, and was just told I didn't. Now I tried to research and find public data and data sources of historical returns or whatever. The problem is with insurance, whether it's life insurance or annuity, these are all private contracts between policy owner, contract owner and insurance company. There is no centralized database that reports all returns of all annuities, of all IULs, etc. It's only what carrier shoes make available.

[A]

Yeah Andy, what a surprise that that information is not available. Yeah, but they will always give you an illustration of what could happen in the future. So with no information really to aggregate and to be able to go, here's what this particular group of contracts even has done. I suppose the answer is to go at it yourself. How long ago did you start this?

[B]

So I bought it December 2022. So it's only two and a half, almost three years old. Not nearly long enough to say whether or not it's a quote unquote success. And also, and it says right on the website that I dedicated to this, the IUL experiment.com this is one policy out of thousands out there that all have their own unique twists and turns. Mine won't necessarily be indicative of yours, of. Of the other person's. The other person's. So what I'm deeming a quote unquote success is whether or not the returns and fees that ultimately manifest themselves throughout the life, throughout the decades long life of this. If they track closely to what was originally illustrated in my policy or better it will have been a success. If they track materially less then it's a. I don't say failure but you know, I still have life insurance all the while, you know, if I die, it pays out. So there's still that. But from like the return the investment type characteristic, that's what I'm testing. Will it hold up to how it was originally projected to.

[A]

So we're not comparing if I took that cash and put it in the stock market in a similar investment. We're comparing to what they illustrated for you, is that correct?

[B]

Correct. Within the confines of itself. I'm not saying this is better or worse than any other option or alternative. Just within the product, what it was projected and illustrated and expected to do. Does it actually do that over the long term?

[A]

Just out of curiosity, what's the particulars? You know, just a couple of them. I assume it's a 0% return if the market goes down. What's your participation rate and in what index?

[B]

So mine's actually a few indexes. I wanted to layer around a few choices just to get pick a sampling. You know, the most common is S&P 500 were to be a one year, what's called point to point. They look at the starting value of the S and P at that one year time, look at the ending value at the end of that year. Whatever percentage that went up, that's the percentage that they reference off of to determine the interest crediting of the IUL subject to the cap or participation rate or whatever. So in mine I have three different choices and you can slice and dice where your money goes into which accounts. One is pure S&P 500 and there's two different multi asset class, what they call target volatility or volatility controlled where it's a mix of things. Whereas an algorithm that re juggles what's what it's invested in, could be stocks, could be bonds, could be cash to keep the volatility around a certain level. And so my thought was by blending these together and they have different maturities. I have a one that's a one year segment, one that's a two year segment, one that's a three year. It should in theory smooth out the returns. I'm not looking to crush it and get you know, 10 return. That's not realistic. I want reasonable steady eddy kind of returns. And again, knowing this is an experiment, for lack of a better word, I wanted to sample different ones because these are actual indices that policyholders are using. I want to sample them out and have a data point that others can reference and say oh, did this actually do what it was supposed to do?

[A]

And that gives you the most amount of information too in the long run. On the S&P 500 portion, what percentage of participation are you supposed to be getting? Or at least that's what they use as the reference point.

[B]

I'd have to go back and look, I, I, I think it's 100% participation, but with a cap at 10%, perhaps now these can change every period. So for example, if it's a one year segment going into that one year, you know, the participation rate and cap rate are what they are at the end of that year, the insurance company can reset them and you'll know at the time what they are should you choose to select that. So it's not like even if I have a 10% cap now, it doesn't mean I'm always going to have that throughout the next 40 years of this policy.

[A]

Yeah, and I love it that you're looking at it at the next 40 years to really see how this plays out. So a big part of the IUL pitch that I hear about is that you get both tax deferred cash value growth and downside protection when markets drop. And on the surface that sounds like the best of both worlds. But from your experience and looking at Iuls in general, how realistic do you think those promises are? What are the trade offs planners should be aware of when they hear a pitch like that?

[B]

It is 100% true that there's tax deferral. With all the interest in life insurance products, any interest you get credited is not taxable at the time. It just sort of builds up and stays deferred within the policy. The magic that is sold is that if you need income from this, eventually you take loans against it. You don't distribute it. If you distribute it, then it can be taxable. If you distribute out more than what you paid in, in premiums in total, the, the excess is ordinary income. But if you take loans against the policy, like any form of loan, any form of debt, that's not income, it's, it's borrowings. So you take loans and the loans aren't taxable when you get the money. And the theory is that as a retirement income tool, you just continually take out loans in retirement. Assume the policy still grows faster than the loan balances, and then eventually when you die, the death benefits part of that is in effect taken by the insurance company to pay off the outstanding loan. Whatever's left then goes to your heirs tax free. Like any insurance death benefit does, it's paid out tax free. So that's sort of the intended use to it and a cad warranted theory. But there's risks to it. Like any form of loan, it's leverage, it amplifies your risk in the product. There's costs associated with that. There's, there's Interest on the loans, as there should be, that interest is an additional cost that comes out of your cash value.

[A]

Let me just pause you there. The interest doesn't go back into your account. It goes to the insurance company as a type of fee. Right?

[B]

Yeah, it's the whole bank on yourself is just categorically slop. It is no different than banking on your house. When you borrow a mortgage, you borrow a loan against your house. You're paying interest to the bank for their money. Your house you still own, it's your collateral. But the loans from the bank, you pay interest to the bank. This is the same thing. The cash value of your policy is still yours, it's your collateral. But the loan you're taking against it is money coming from the insurance company. You're paying them interest on that loan. Correct.

[A]

And generally, what's the interest rates that insurance companies charge versus what the rates

[B]

banks charge for loans, they are actually lower. That won't necessarily always hold. But currently it's roughly 5%, you know, give or take a little bit depending on the carrier. So like it is a cheaper cost of funds. And like a margin loan on a brokerage account where you're talking probably 10, 11, 12% interest, you know, home equity loans currently mortgages 6, 7%. So it is a comparatively cheaper cost of funds which, which you know, does support a potential use case for using it as a temporary cash solution.

[A]

But it sounds like to avoid tax, you can only borrow up to the amount of the principal that you put in. Am I hearing you correctly on that?

[B]

Up to the cash value. The cash value, yeah. So if you paid in, let's just assume $100,000 total premium. You've had this policy 30 years and the cash value grows to 300 grand, you can borrow most of that. Each carrier is a little different. They won't let you borrow 100%, but let's just assume it's 90%, 80%.

[A]

I don't know.

[B]

So that's what, 200 plus thousand you can borrow. That loan still isn't taxable. Now if, if you, you were to let the policy lapse, like the interest cost gets carried away, you stop paying money in, the interest you get credited doesn't keep up, cash value can go down, go down, go down, go down. Worst case, you know, deplete and you surrender the policy, what happens then is any amount of loan outstanding in excess of what you paid in that excess is all taxable as ordinary income in that year of that, of that surrender. Now that's a worst Case scenario, I'm sure it happens. Hopefully not likely, but. But that is potentially how ugly these can get in theory.

[A]

Right. And I'm going to assume here that the insurance company won't let the cash value go below the amount that is being borrowed. Am I wrong in thinking that? How does that work?

[B]

They won't stop it. There's a reason why they won't let you borrow 100%. They do want to leave some buffer because there's still going to be costs and fees that come out of this every year. So if you're no longer contributing and you have a large loan balance outstanding and you're not paying off interest, you don't have to, you're not paying off interest, that interest expense comes out of your cash value. And if the market has a long slog of unimpressive returns such that the interest your cash value is earning isn't outpacing the cost fees and loan interest expense, cash value continue to go down. Worst case, it can spiral and just consistently go down till it hits zero. The insurance company can't stop it from going down. They can say, hey, you got to put more money in or this thing will lapse. And that's, that's the risk you run. Now, well structured IULs will have what's called the overloan protection rider, so that if the policy is a certain age and you borrow only up to a certain amount, it'll prevent it from lapsing. If it does get to that sort of terminal, you know, nuclear option, the policy is, okay, done, you can't borrow anymore. You can't add money in. Like this thing's now locked in stone. You just. Your death benefits probably reduced from what it was originally, but that'll help prevent the catastrophic loan lapse and having a big fat taxable event which if, if

[A]

I would correlate it to something that, you know, the investing public is more aware of, it probably be similar to a margin call if you have a taxable investment.

[B]

Yeah, loosely similar. Yeah.

[A]

Yeah, that makes sense. Okay, well, if the client's real goals are tax deferral and downside protection, and those are the two big IUL promises, but they're a little bit concerned about, you know, the complications and some of the details we just talked about in iul, what are some of the alternatives that planners maybe should put up on the table if they're looking for those two important things of tax deferral, downside protection?

[B]

There's actually multiple alternatives to this. So people who first and foremost want indexing as an investment product or investment alternative probably shouldn't buy an IUL because again, first and foremost is life insurance. You should always have a need for a permanent life insurance policy. Only secondarily to that is the ancillary benefits of this cash value indexing, whatever. So you can get just pure indexing investment like things without having to buy insurance, such as fixed index annuities are basically that it's just the indexing component without it being tacked onto life insurance. There's structured notes, lots of banks will issue structured notes that have a payout profile that could be identical to an IUL's interest crediting. There's now even ETFs that the public can buy. You know, liquid ETFs you can buy in a brokerage account that have different. You can get zero, zero floor, you know, zero downside. There's also maybe they call buffered, where you can get 10% downside, 20% protection, 30% whatever, so you can buy that. So if you want just the indexing component, there's a lot of other options, cheaper, easier, less complicated than having to buy it as a just sort of bolted on feature to a permanent life insurance policy. And if you want tax deferral, obviously there's qualified accounts you can buy inside an ira, buy inside a Roth ira. You can buy these things in regular, you know, non qualified money. So there's, there's lots of options to control the taxability of these as well.

[A]

Because inside of iul, if you're interested in that type of investing where, okay, I have some guarantees, it's not actually necessary to add on that layer of life insurance. How much does that layer of life insurance cost in most Iuls? Just ballpark.

[B]

Yeah, it really depends how, how much you fund the iul. So you'll probably hear a term called max funded iul, which means you put in as much premium as you can without breaking IRS rules about it becoming a modified endowment contract, which ruins a lot of the favorable taxability of it. So you want to put in, you know, the minimum amount of death benefit for the maximum amount of cash you can put in. When you do that on a, on a, you know, percentage basis, the cost of insurance fees are much lower relative to your cash value than if you only fund it at the bare minimum premium needed. So just as an example, in my iul, it is max funded. It is, you know, I put in as much as I can for the level of death benefit I have the first year all in fees are about 17%. Hold up. Sounds gross.

[A]

Andy, let me make sure I heard you correct. 17% for the first year, 1 7.

[B]

That's correct.

[A]

That's correct.

[B]

Between cost of insurance charges and then the. I forget the exact names policy fee premium surcharge, like the first 10 years have pretty high fees. But then as I continue adding to cash value, as cash value is assumed to grow, you know, as I pay more premium and cash values assume to grow in the second year, the fees relative to cash value at the time are like 9%. By year 10 they get down to sub 1%. And then from years like 15 onward, they're projected to be as a percent of cash value. The fees are like 50 basis points, half a percent, slightly less. So you blend it out over the life. If you do max fund this and you hold it for decades, the aggregator fees over the life can be sub 50 basis points. But the early year fees are very high and no one tries to hide that. So these are long term commitments. Do not buy an IUL if you plan on closing or taking it out in one year, two years because the fees are insanely high for that use case.

[A]

Yeah, or even in the next five years or half a dozen years or so.

[B]

Yeah, it's gotta be a decade plus, if not, well longer than that. You know, going into this thing. Yeah.

[A]

All right, well that makes a lot of sense. And let's wrap up with this. If a CPA planner wants to start a conversation with a client who maybe has heard a pitch about be your own bank or an IUL as a retirement solution, what are some thoughtful, let's call them non confrontational questions that they can ask to open up the dialogue and really help the client? Simply make an informed decision.

[B]

I think always start with do you first and foremost have a need for permanent life insurance? If the answer is no, and you're buying this thing just for the secondary benefits of the cash accumulation and potential to borrow, like do not do it too complicated, too expensive for what you want and need it for. Let's assume you do have a legit desire or need for permanent life insurance for whatever your reasons are. Then fine. Then move on to the next set of questions. One would be do you fully understand what you're buying and the risks involved and the contractual allowances the insurance companies have to change things like cap rates, participation rates, cost of insurance fees over time. Do you understand that? Vast majority of consumers frankly don't and never will understand these because they are that complicated. Some will, but majority won't. Looking at the illustration, the people who sell These will often have you focus on the far right most column which is the the maximum interest allowed to be showed per insurance regulations. The column on the left will be the worst case that's not going to happen. That that's like obscenely, you know, draconian worst case assumptions. The reality of how this will play out is likely somewhere in the middle. So as a consumer, just like are you okay with that? Did you have that discussion of this is the the max they're allowed to show what can realistically happen or what's a range of outcomes and if once you know those ranges, are you still okay with the product? And finally, like we touched on before, are you fully willing and able to commit to this for the long term? This is a marriage. Don't buy this unless you have easily 10 plus years of assumed commitment to this, that you're going to have the willingness and financial ability to continue to fund this as originally planned. Because if your funding falls short, almost guaranteed your results are going to fall short of what was originally projected to you.

[A]

I think that really hits the nail on the head. This is an investment and insurance marriage. You're getting into it and it's expensive to get into it and you have to plan on having it for a long time. That means this is not side money. This is not money that if something happens you're going to want to liquidate it. This is really at the end of the train and that you would want to break because the costs have been so high to get into it. Andy, thank you for sharing with our community of listeners. Great insight and I loved unraveling the IUL with you. That was enjoyable. Now if you're an advisor listening who wants to deliver premier financial planning with confidence, explore everything the AICPA PFP section has to offer at of course aicpa.org BFB for 269 a year, if you're an AICPA member, you get access to a library of technical guidance, including insurance like we've been talking about. Webcasts, planning tools, and expert insights like Andy's, all designed to help you serve your clients at the highest level. And if you're a CPA with 3,000 hours of planning experience already, consider showing your expertise next to your name by obtaining the PFS [e-mail] PFS it's the financial planning credential only available for CPAs. This is our podcast together and if this episode helped you in your practice, we'd be grateful if you shared it with your professional community. With almost half a million downloads so far, the AICPA PFP podcast is helping elevate the profession one listener at a time. Thanks to you this has been Carrie Sinnett for the AICPA Personal Financial Planning Division. Thanks for listening and until next time, keep earning trust through clarity and guiding with compassion and delivering premier planning that elevates our profession this content is designed

[C]

to provide illustrative information with respect to the subject matter covered and does not represent an official opinion or position of the AICPA or the association or cima. It is provided with the understanding that they are not engaged in offering legal, accounting or other professional services. If such advice or expert assistance is required, the services of a competent professional person should be sought. The aicpa, the association and CEMA make no representations, warranties or guarantees as to, and assume no responsibility for the content or application of the material contained herein and especially disclaim all liability for any damages arising out of the use of, reference to, or reliance on such material.