HONEST ANSWERS ABOUT IUL’S

The IUL Evangelist: A Journey from Tech to Truth

My name is Cindy Kowalski, founder of Eligry LLC, and my passion has always been crystal clear: using my knowledge to provide honest answers to the questions my clients desperately need answered when making life-changing decisions.

For years, that mission played out in the technology field. I cut my teeth at AT&T, learning how complex systems really work, then launched my own technology consulting firm where I built a reputation for cutting through vendor nonsense and giving clients the straight truth about what would actually solve their problems. My mom used to laugh and tell me I should sell Bunn Coffeemakers because I was so passionate about them—when I believed in something, that enthusiasm was infectious.

In 2025, I decided to expand my impact and became licensed to sell Life, Accident, and Health insurance across multiple states. At first, I was genuinely excited. Here was another field where I could use my analytical skills to help people make informed decisions about protecting their families and futures.

That excitement died quickly.

What I discovered was an industry overrun with agents chasing quick commissions, pushing whatever “product of the month” stuffed the most money into their own pockets. The lack of genuine care for client outcomes was staggering. But then I heard whispers about this “hot” product called Indexed Universal Life—IUL.

Initially, I was skeptical. Too many people, including financial personalities like Dave Ramsey, were warning against IULs with horror stories of policies that imploded and left families financially devastated. But something didn’t add up. How could a product be simultaneously labeled as both a wealth-building miracle and a financial disaster?

I decided to do what I’ve always done: dig deeper.

What I discovered changed everything. IULs, when structured correctly, are potentially the most powerful wealth-building and tax-advantaged vehicles available. They offer tax-free growth, tax-free income, and a death benefit for your loved ones—a triple threat that’s nearly impossible to replicate elsewhere.

The catch? The phrase “when structured correctly” is doing heavy lifting.

Structured incorrectly—which describes over 90% of IULs sold today—these policies become wealth-destruction machines. Agents earn massive commissions selling IULs, often $10,000 to $50,000 per policy, which creates a perverse incentive. Most agents learn just enough to make the sale, not enough to structure the policy properly.

The result? Clients pay premiums for years, only to discover their policies are underfunded ticking time bombs that will either lapse worthlessly or require massive additional premiums to survive. No wonder Dave Ramsey and others tell people to run from IULs—they’re seeing the carnage from the 90% that are set up wrong.

But here’s what the critics miss: a properly designed IUL is possibly the only way to create true tax-free retirement income while maintaining life insurance protection.

I spent an entire year researching everything available about IULs. I listened to both the haters—and there are many—and the lovers, who are fewer but deeply knowledgeable. I studied with genuine experts who understand the intricate funding ratios, death benefit structures, and performance assumptions that separate wealth-building policies from financial disasters.

My conclusion? When I see a properly structured IUL, I get that same passionate enthusiasm my mom noticed with the Bunn Coffeemakers. This isn’t just a financial product—it’s potentially the most powerful wealth accumulation strategy available to everyday Americans.

The problem is that finding an agent who actually understands proper IUL design is like finding a needle in a haystack. The vast majority are either ignorant of proper structuring or willfully ignore it because maximum death benefit policies (which are usually wrong for wealth building) generate higher commissions.

I refuse to sell something I don’t understand inside and out. I’m a great salesperson when I believe in the solution I’m presenting, but I’m an even better educator when I know my clients are getting exactly what they need.

That’s why I’ve made proper IUL education and design my mission. Too many families have been burned by agents interested only in lining their pockets. Unfortunately, that describes the majority of this industry.

My goal is simple: ensure that every IUL I touch is structured to build wealth, not destroy it. Because when done right, there might not be a better way to accumulate tax-free wealth in America today.

The question isn’t whether IULs work—it’s whether you’re working with someone who knows how to make them work for you.

Indexed Universal Life (IUL)

What most agents don’t know … or won’t tell you

The Critical Truth About IUL Policies: Setup Makes or Breaks Everything

Indexed Universal Life insurance policies are incredibly powerful wealth-building tools when designed correctly, but they can become financial disasters when structured improperly. The difference between a well-designed IUL and a poorly structured one isn’t just a matter of performance—it’s the difference between building tax-free wealth and watching your premiums disappear into a black hole of fees and charges. Many agents treat IULs like simple life insurance policies, cramming in maximum death benefit without understanding the intricate balance required between premium funding, cost of insurance charges, and cash value accumulation. When an IUL is set up wrong—whether it’s over-funded to trigger Modified Endowment Contract (MEC) status, under-funded to the point where rising insurance costs drain the cash value, or structured with the wrong death benefit option—it can implode years down the road, leaving policyholders with a worthless contract and decades of lost premiums.

That’s precisely why Eligry LLC has invested the last year taking every available training course on IUL design and consulting with the nation’s top IUL experts and actuaries. We’ve studied under the industry’s leading authorities, mastered the complex interplay of premium loads, cap rates, participation rates, and crediting methods, and learned the critical nuances that separate wealth-building IULs from policy disasters. Our team understands the mathematical precision required to structure an IUL that maximizes cash accumulation while maintaining policy sustainability through market volatility and changing insurance costs. We know how to properly fund policies to avoid MEC status while optimizing the Modified Endowment Contract threshold, how to select the right death benefit option for your specific goals, and how to stress-test illustrations to ensure your policy performs even in worst-case scenarios. When you work with Eligry LLC, you’re not just getting an IUL policy—you’re getting a precisely engineered wealth accumulation vehicle designed by experts who understand that in the world of Indexed Universal Life, the details make all the difference between financial success and costly failure.

1. Indexing Strategy

  • Your account’s growth is linked to a market index (like the S&P 500) — but you’re not actually invested in the stock market.

  • The insurance company tracks the index’s performance and credits interest to your account based on it.

2. Protection from Market Loss

  • Because you’re not directly invested in the market, if the index goes down, you don’t lose any of your principal(the money you’ve already put in).

  • The worst credited interest for a period could be 0% — meaning you don’t make anything that year, but you also don’t lose what you already had from market drops.

3. No Loss of Principal from Market Dives

  • If the stock market crashes, your IUL or fixed indexed annuity value doesn’t drop with it.

  • The only way your principal could decrease is if you take out money or don’t pay policy charges — not because of market performance.

Example:

  • If the S&P 500 goes up 8%, and your index crediting method has a cap of 10%, you might get the full 8% credited to your account.

  • If the S&P 500 goes down 20%, you’re credited 0% — your balance stays the same (minus normal policy fees).

AN IUL SETUP THE WRONG WAY

The Case of the Vanishing Retirement

Sarah, a 45-year-old nurse, met with an insurance agent who painted a rosy picture: “Put $2,000 monthly into this Indexed Universal Life policy. It’ll grow tax-free, you can borrow against it for retirement, and leave a death benefit for your kids. It’s like a 401k and life insurance rolled into one!”

What the agent didn’t explain clearly was how the policy actually worked.

The Fatal Flaw: Minimum Funding

The agent structured Sarah’s IUL with a $500,000 death benefit but only funded it at the minimum level to “maximize cash value growth.” This created a ticking time bomb. The policy had high internal costs – insurance charges, administrative fees, and fund management expenses that consumed roughly $150-200 of her $2,000 monthly premium.

The Market Reality Check

The policy was sold with illustrations showing 7-8% annual returns based on index performance. But IULs have caps (typically 10-12%) and floors (usually 0-2%). During the first five years, market volatility meant Sarah’s policy earned an average of just 3% annually – far below the rosy projections.

The Death Spiral Begins

By year 7, Sarah’s cash value was barely $80,000 despite paying in $168,000. The insurance costs kept rising as she aged, eating more of each premium. When she tried to take a policy loan for her daughter’s college tuition, she discovered the brutal truth: loans accrue interest, and if the policy can’t service that debt from poor performance, it enters a death spiral.

The Horrific Ending

At age 62, Sarah received a letter: her policy would lapse within 12 months unless she paid $8,000 immediately, then $12,000 annually going forward. She’d paid in $408,000 over 17 years. The cash surrender value? $45,000. The insurance company kept the rest.

She lost over $360,000 of her retirement savings.

The Simple Change That Would Have Saved Her

Instead of maximum death benefit with minimum funding, the agent should have:

  1. Right-sized the death benefit – Used a $150,000 death benefit instead of $500,000
  2. Overfunded the policy – Put the same $2,000 monthly premium into the smaller death benefit
  3. Focused on the Modified Endowment Contract (MEC) limit – Funded it just below MEC levels to maximize cash accumulation while maintaining tax benefits

This approach would have dramatically reduced insurance costs, allowing more money to grow in the cash value. With proper funding ratios, her policy would have been self-sustaining and actually built substantial retirement wealth.

The difference between financial security and financial ruin often comes down to understanding the funding mechanics that many agents either don’t know or don’t properly explain.

The difference between a wealth-building and wealth-destroying IUL comes down to proper death benefit sizing and realistic funding. If your agent can’t explain MEC limits or insists on high death benefits, walk away. You want an engineer’s approach, not a salesperson’s pitch.

The Million-Dollar Meltdown: When Premium Financing Goes Wrong

Marcus, a successful tech entrepreneur worth $15 million, was approached by a wealth management team with an “exclusive strategy for the ultra-wealthy.” They proposed a $50 million Indexed Universal Life policy funded through premium financing – essentially borrowing money to pay the premiums.

The Seductive Pitch

“You’ll put up $2 million as collateral, we’ll arrange bank loans for the $1.5 million annual premiums. The policy’s cash value will grow tax-free, and eventually become self-sustaining. You’ll have a $50 million tax-free death benefit and potentially millions in accessible cash value. The arbitrage between low loan rates and policy growth will make you richer.”

The Catastrophic Structure

The policy was designed with maximum death benefit and illustrated at 7.5% annual returns. The bank loans carried variable interest rates starting at 4%. The plan assumed the policy would outperform the loan interest, building enough cash value to eventually pay off the debt and become self-sustaining around year 15.

Where It All Went Sideways

  1. Interest Rate Shock: Three years in, the Fed raised rates aggressively. Loan rates jumped from 4% to 8%, while the policy’s capped returns stayed modest due to market volatility.
  2. The Compounding Nightmare: Each year, unpaid loan interest was added to the principal. With $1.5M annual premiums plus accumulating interest, the loan balance ballooned from $4.5M in year 3 to $8.2M by year 6.
  3. Policy Performance Collapse: Instead of the illustrated 7.5%, the policy averaged just 2.8% annually due to caps, fees, and market conditions. The cash value couldn’t keep pace with the exploding debt.

The Point of No Return

By year 7, Marcus faced a horrific choice:

  • Loan balance: $12.3 million (growing at $2.1M annually with interest)
  • Policy cash value: $3.8 million
  • Annual shortfall: The policy needed an additional $800,000 annually just to service the debt

The bank demanded either full repayment or additional collateral. Marcus had to liquidate $12.3 million in assets – triggering massive capital gains taxes – to pay off loans on a policy worth less than $4 million.

Total Damage: Marcus lost $8.5 million in cash, plus another $2.1 million in taxes. A $15 million net worth became $4.4 million in seven years.

The Simple Alternative That Would Have Changed Everything

Instead of premium financing, Marcus should have used a self-funded, properly-sized policy:

  1. Reasonable death benefit: $5-8 million instead of $50 million
  2. Direct funding: Use his own $1.5M annually instead of borrowed money
  3. MEC-limit funding: Structure for maximum cash accumulation
  4. Conservative illustrations: Plan around 4-5% returns, not 7.5%

This approach would have:

  • Eliminated interest rate risk entirely
  • Built $8-12 million in accessible cash value over 15 years
  • Provided meaningful life insurance without the leverage catastrophe
  • Kept his wealth intact and growing

The Brutal Irony

The very complexity and “sophistication” that made the premium financing strategy appealing to Marcus’s ego became the mechanism of his financial destruction. A straightforward, boring approach would have made him wealthier and safer.

Premium financing IULs have destroyed more wealthy families than market crashes, turning insurance policies into wealth-destruction machines when interest rates and returns don’t align as projected.