Key Takeaways
- IUL has the highest complaint rate in life insurance—transparency prevents 80% of issues
- Only 5-10% of clients are ideal IUL candidates: high earners who've maxed retirement accounts
- IUL illustrations using realistic 4-5% returns prevent the disappointment that 7%+ illustrations cause
IUL Practice
Client Question: "My friend has an IUL and says it's great—should I get one?"
IUL requires the most careful conversations of any product. Only 5-10% of clients are ideal candidates.
The IUL Curious Maximizer
A high earner interested in IUL for additional tax-advantaged growth
Setup
A 42-year-old executive earning $300,000 has maxed out all traditional retirement accounts and wants to explore IUL for additional tax-advantaged growth.
Client says:
“My accountant mentioned IUL as a way to save more with tax advantages. I max out my 401k and do a backdoor Roth. I like the idea of market-linked growth without downside risk. Walk me through how this works—and be honest about the downsides too.”
Practice Objectives
- 1Confirm they've truly maxed traditional options first
- 2Explain IUL mechanics clearly (caps, floors, costs)
- 3Be honest about the limitations and complexity
- 4Discuss realistic expectations vs. illustrations
- 5Help them decide if it fits their overall strategy
The Misinformed Prospect
Someone who heard IUL is "risk-free stock market investing"
Setup
A prospect was told by a friend that IUL lets you invest in the stock market without any risk of loss. They want to move their 401k into IUL.
Client says:
“My friend said I should put my retirement savings in IUL instead of my 401k. He says it's like the stock market but you can't lose money. Why wouldn't everyone do this? Can you help me roll over my 401k into IUL?”
Practice Objectives
- 1Correct the misconception gently
- 2Explain how IUL actually works (it's not stock investing)
- 3Discuss why 401k shouldn't be rolled into IUL
- 4Be the honest professional they need
- 5If IUL fits anywhere, it's alongside—not replacing—401k
The Illustration Reality Check
A prospect questioning the IUL illustration
Setup
You're showing an IUL illustration to a financially sophisticated client. They're asking tough questions about the assumptions.
Client says:
“These projected returns look great—7% average in the illustrated column. But the guaranteed column shows much less. What happens if returns are closer to 4% on average? And I see the cost of insurance increases every year. Can you show me what happens if this doesn't perform as projected?”
Practice Objectives
- 1Answer their questions honestly
- 2Explain the difference between illustrated and guaranteed
- 3Show what happens in different scenarios
- 4Discuss the risk of policy lapse if underfunded
- 5Help them make an informed decision
The IUL Complaint
A client upset with their existing IUL performance
Setup
A referral comes to you unhappy with an IUL they bought elsewhere. The cash value isn't growing as they expected.
Client says:
“I bought an IUL five years ago from another agent. He showed me these beautiful illustrations—my cash value was supposed to be $50,000 by now. It's $18,000. I feel like I was scammed. Can you help me understand what went wrong? Should I cancel this thing?”
Practice Objectives
- 1Listen to their frustration without blaming the other agent
- 2Review their policy to understand what happened
- 3Explain factors that may have affected performance
- 4Discuss options: keep, modify, or surrender
- 5Be the trusted advisor they need now