Comparing Two IUL Illustrations: The Numbers to Put Side by Side

To compare two indexed universal life illustrations, first match the insured person, death benefit, premium schedule and planned distributions. Then compare guaranteed values, policy charges, crediting assumptions and loan terms separately. The illustration with the largest projected cash value is not automatically the better fit.

An illustration shows results under specified assumptions. It does not promise that future caps, crediting or loans will perform as shown. This guide provides a comparison sheet you can copy or print and use with the full carrier illustrations. Start by comparing IUL companies on matched inputs, then use this worksheet to examine the actual illustrations rather than a ranking alone.

Match the inputs before judging the outputs

Two illustrations can both name the same applicant and still model different purchases. One might fund premiums for ten years while another funds for twenty, or one may use a different death-benefit option. Those differences can materially affect the values shown.

Ask the agent to produce one matched comparison before showing alternative designs. Identify any differences that cannot be matched because the products have different features. A meaningful comparison makes those differences visible rather than hiding them in the final cash-value column.

• Same insured person, issue age, state, underwriting class and illustration date.
• Same initial death benefit and stated benefit option.
• Same premium amounts, frequency, timing and years paid.
• Same riders or a clear explanation of differences.
• Same year and amount of each intended withdrawal or loan.
• Same checkpoints for comparing values and continued coverage.

Our indexed universal life introduction explains the basic structure. If the main question is whether IUL fits the purpose at all, review IUL’s benefits and limitations before selecting a design.

Read the guaranteed pages first

The NAIC’s illustration overview distinguishes basic illustrations showing guaranteed and non-guaranteed elements from supplemental illustrations. Keep the full basic illustration. A summary page or supplemental chart does not replace its guaranteed information.

Record what is guaranteed at the planned premium, what conditions support any no-lapse protection and whether the guaranteed values show coverage ending before your target age. Ask the agent to explain why the guaranteed and current-assumption results differ.

If your essential goal is a death benefit guaranteed for life, state that goal directly. An IUL design emphasizing projected cash value may answer a different question. A protection-focused GUL design may be another structure to compare, while IUL versus whole life helps compare another permanent structure.

Separate the illustration rate from the crediting rules

Record the illustrated rate and the account assumed to receive premiums. Then identify its index, segment duration, cap, participation rate, spread or threshold where applicable, and whether an additional account or rider charge applies. Different formulas can produce different results even when a headline cap is similar.

F&G’s historical-rate resource notes that caps, participation rates and spreads can change. It also directs readers to the full policy illustration and guaranteed values. A current cap is a term for a specified period or segment, not a promise that the same cap applies for decades.

Pacific Life’s IUL explanation distinguishes index-based protection from charges and distributions that reduce policy value. A floor on an indexed interest credit does not establish that net cash value cannot decline. Premium loads, insurance costs, rider charges and loans still need to be examined.

Our IUL renewal cap-rate guide addresses that narrower issue. Use it to frame renewal questions, then compare the complete policy design and funding in the illustrations.

A printable two-illustration worksheet

Copy the table into your notes or print this page using your browser. Record the page number for each entry so you can find it again. Use “not shown” rather than assuming a missing item is zero or guaranteed.

Compare charges and accessible value at the same checkpoints

Ask for an explanation of premium charges, administration, cost of insurance, rider costs, account charges and surrender charges. Some charges are expressed as a percentage, some as a fixed amount and some change with age or policy duration. A single fee percentage is not the whole cost.

Compare cash surrender value as well as account value. Subtracting applicable surrender charges and debt can produce a different accessible amount from the accumulation figure highlighted in a sales presentation. Use the carrier’s actual net columns and ask the agent to identify what each one includes.

Keep early-year liquidity in view. A product can illustrate a larger later value while having less accessible value when you might need it. For the contrasting permanent structure, review how whole life cash value builds and can be used, separating its guarantees from any nonguaranteed dividends. Our IUL cash-value guide helps connect those entries to your intended use.

Request alternative scenarios, not only the main projection

Ask each carrier to run the same lower crediting assumptions, delayed or reduced premiums, and any intended distributions. Use the carrier’s illustration system and permitted scenarios. The question is how the design responds, not whether an assumed smooth return is likely to occur every year.

Record whether lower crediting means a smaller available distribution, a need for additional premiums or a projected lapse before the target age. If results depend on a particular loan-crediting advantage, examine the scenario where that advantage shrinks or reverses.

Pacific Life’s indexed-interest disclosure recommends examining alternative-loan illustrations under lower credits, market weakness, reduced caps and fluctuating interest. That is a product-specific primary example of why one level-crediting loan projection is an incomplete comparison.

Read the loan assumptions before treating distributions as income

A policy loan is debt secured by the policy. Identify the loan type, rate, whether that rate can change, how borrowed value is credited and whether a rider adds a charge. Ask how outstanding debt affects available value and the death benefit.

If a presentation shows future annual “income,” ask which amounts are withdrawals and which are loans. Determine what happens if premiums stop, crediting is lower or loan interest accumulates. Avoid treating an illustrated distribution as a guaranteed retirement payment.

Ask the agent and tax adviser to explain how the proposed design handles life-insurance tax limits and any modified endowment contract risk. Tax treatment and possible consequences of a lapse or surrender with debt should be reviewed for your situation before relying on distributions.

Choose the policy you can fund and monitor

State your primary goal: death-benefit protection, possible cash-value access, or a combination. Decide what premium commitment is sustainable and how much uncertainty you can accept. If two designs answer different goals, request a comparison that reflects the goal you actually have.

Keep the final illustration and review policy statements after purchase. Request updated in-force information when funding, loans or other assumptions change. An original sales illustration is a record of assumptions, not a permanent forecast.

Explore our universal life insurance hub, or request matched IUL illustrations from available carriers. Bring any existing illustration and ask for the guaranteed pages, charge explanation and comparable alternative scenarios.