The Dirty Secret of IUL: So Many Variables Are Not in Your Control
Written and reviewed by Hans Goldstein, licensed insurance producer, NPN 20602398 · CA Insurance License #4273294Last reviewed · Published October 3, 2026
What the illustration quietly assumes
An illustration runs today's cap, today's charges and today's loan rate forward for 40 or 50 years as if none of them will ever change. Most of them can. The contract sets the limits (the guaranteed minimums and maximums), and inside those limits the insurer decides. That is not a scandal; it is how a flexible, non-guaranteed product is built. The problem is that most buyers never see the limits, only the current numbers.
What the insurer can change, within the contract
| Variable | Who controls it | Contract limit (guaranteed) | What happens if it moves |
|---|---|---|---|
| Cap rate | Insurer, usually at each segment renewal | The guaranteed minimum cap in the contract (public examples: 0.25% to 4%; most insurers do not publish it) | Lower credits in good market years; cash value grows slower |
| Participation rate | Insurer | Guaranteed minimum participation (in the policy form) | You get a smaller share of the index gain |
| Spread or index charge (on some accounts) | Insurer | Maximum spread or charge in the contract | A bigger slice is taken before you are credited |
| Index accounts offered | Insurer | Usually the right to close or replace strategies, often with a guaranteed fixed account | Your favorite account can be closed or swapped for a new one |
| Cost of insurance (COI) rates | Insurer | The guaranteed maximum COI table (often 2017 CSO based) | Monthly charges rise; underfunded policies drain faster |
| Per-unit and expense charges | Insurer | Guaranteed maximum charges in the policy | More of each premium goes to charges |
| Premium load | Insurer | Guaranteed maximum premium load | Less of each payment reaches cash value |
| Variable or indexed loan rate | Insurer (often tied to a published index) | A maximum loan rate, or a formula | Borrowing costs more; a loan can outgrow the cash value |
| Loan crediting (the 'arbitrage') | Insurer and the index | Often no guarantee beyond the floor | In a flat year you pay loan interest and earn about zero |
| Bonuses and multipliers | Insurer, under the terms of the rider | Terms in the rider; regulators limit how they illustrate | A promised boost may shrink or cost more than it adds |
- Funding level. The car, SUV or semi-truck decision. A policy funded near the tax-law limit has the most cushion when charges or caps move (max-funded IUL).
- Death benefit option. Option B (increasing) while you fund, then the switch to Option A (level) later, cuts the amount at risk and the charges.
- Paying on time. Missed or short premiums are the most common reason a policy falls behind.
- Loan behavior. How much you borrow, which loan type, and whether you pay interest.
- Monitoring. An in-force illustration every year shows where the policy is headed at current and guaranteed assumptions (request letter).
An honest presentation of anything non-guaranteed uses words like "up to", "could" or "illustrated at". If you hear "will" about cash value, index credits, loan income or a living-benefit payout ("this policy will pay you 80%", "you will have $1 million at 65"), treat it as a red flag. Only the guaranteed column and the contract's stated guarantees are promises; ask the person to show you where the word "guaranteed" appears.
AI voices. Education, not tax or legal advice. Hans is paid a commission if you buy a policy through him. Comment REVIEW on the video for the checklist.
It has happened before
These are documented records, not predictions. Insurers have changed in-force terms, and some of those changes ended in court:
- Caps changed on in-force IULs. Transamerica changed caps on some older in-force IUL policies effective 12/16/2023, some up and some down (NFG Brokerage: Transamerica IUL cap rate changes effective 12/16/2023 (carrier notice reposted; secondary)).
- Cost of insurance increases on universal life. Several insurers raised COI rates on in-force universal life blocks, and policyholders sued. Settlements include AXA Equitable, a cash fund of up to $307.5 million agreed in May 2023 (Brach Family Foundation v. AXA Equitable, official settlement site (S.D.N.Y. 1:16-cv-00740)); Transamerica, $195 million in 2018 (Top Class Actions, 10/8/2018: Transamerica $195M COI settlement (secondary)); Lincoln and Connecticut General, $147 million with final approval in 2025 (Legal News Feed, 6/17/2025: Lincoln / Connecticut General $147M COI settlement final approval (secondary)); and John Hancock, over $123 million in 2022 (Top Class Actions, 2/11/2022: John Hancock $123M COI settlement (secondary)). These were mostly older universal life blocks, not new IUL, but the contract right to change COI within the guaranteed maximum is the same idea.
- Products and strategies are closed. Protective discontinued its Indexed Choice UL for new sales on 3/9/2026 (WinFlex: Protective Indexed Choice UL discontinued 3/9/2026). Existing owners keep their policies, but closed products tend to get less attention from the insurer over time.
- Regulators tightened the illustrations. Actuarial Guideline 49 (2015), 49-A (2020, which also limited how multipliers and bonuses can illustrate) and the 2023 revision all exist because illustrated values were looking better on paper than the guarantees support (AG 49-A).
- Ask: what is the guaranteed minimum cap and the guaranteed minimum participation rate in the contract for each index account? Not today's cap, the floor the cap can never go below.
- Why it matters: today's cap is not guaranteed. The insurer can lower caps on your policy over time, all the way down to that contractual minimum. Guaranteed minimum caps we have seen published run from 0.25% to 4% (insurer documents, 2024 to 2026), and several insurers don't publish theirs at all. That is a very different worst case.
- Many agents cannot answer this question on the spot. If yours can't, ask them to find it in the policy form or the illustration's guaranteed assumptions before you sign.
Where the insurer publishes it, the Goldstein Scorecard shows the guaranteed minimum cap; otherwise it says "not publicly disclosed". Caps, participation rates, loan rates, charges and dividends are not guaranteed and can change.
What can your insurer still change?
Send your email and I'll send the in-force illustration request letter, then show you the guaranteed limits on your policy within one business day.
Phone is optional: add it only if you’d like a text with your numbers, or a quick call with Hans to make sure you don’t miss anything. Leave it blank and I’ll only email you. Hans Goldstein · NPN 20602398.
Rather talk it through? Or book 15 minutes on Hans’s calendar.
Guaranteed, midpoint and illustrated: where real results land
Because so many inputs can move, a real policy rarely tracks its illustration. Results usually land somewhere between the guaranteed column and the illustrated column. The chart shows the gap for an underfunded design, where the guaranteed column runs out of money.
| Year (age) | Guaranteed | Midpoint | Current |
|---|---|---|---|
| 1 (45) | 0% | 0% | 0% |
| 5 (49) | 52% | 62% | 74% |
| 10 (54) | 66% | 83% | 104% |
| 15 (59) | 74% | 98% | 131% |
| 20 (64) | 67% | 108% | 172% |
| 25 (69) | 56% | 117% | 226% |
| 30 (74) | 36% | 123% | 299% |
Hypothetical. Not an illustration of any specific policy. Not a quote. A transparent model built for this site, not a carrier illustration. Assumptions: male preferred nonsmoker, $10,000 a year for 15 years, Option B while paying then Option A, premium load 10% (years 1-10) then 5%, $10 monthly fee, a per-$1,000 charge for 10 years, surrender charge grading to zero by year 15. Current = 6.0% crediting (near the AG 49-A maximum) and current COI at 80% of 2017 CSO select rates; guaranteed = 0% crediting and maximum COI at 100% of 2017 CSO ultimate rates; midpoint = 3% crediting and COI halfway between. Real policies differ. Past index performance is not indicative of future results. Ask for an in-force or new-business illustration from the insurer, which shows the guaranteed column first.
No policy performs exactly as illustrated. Real results usually land somewhere between the guaranteed column and the illustrated (current) column: some years credit less than assumed, charges can move within their limits, and premiums are rarely paid exactly on schedule. That is why the midpoint column, halfway between the two, is the most useful planning number, and why Hans shows guaranteed, midpoint and current side by side.
Guaranteed minimums, product by product
We checked every IUL we could find for a public document that states its guaranteed minimum cap. Most don't publish one. That is the point: the number that sets your worst case is usually the one buyers can't see without asking.
Guaranteed minimum caps, 33 IULs, public documents only (as of 10/4/2026)
| Product | Insurer | Guaranteed minimum cap (lowest account) | Source |
|---|---|---|---|
| Nationwide IUL Accumulator II 2020 | Nationwide Life and Annuity Insurance Co. | 4% | carrier document, 2026-03-15 |
| FlexLife IUL | National Life Group | 3% (up to 3.1% on other accounts) | carrier document, 2026-01 |
| WealthBuilder IUL | Lincoln Financial | 2% (up to 3% on other accounts) | carrier document, 2026-05 |
| Lincoln WealthProtector IUL | Lincoln National Life Insurance Co. | 2% (up to 3% on other accounts) | carrier document, 2026-02-17 |
| Financial Foundation IUL II (FFIUL II) | Transamerica | 2% | secondary, BGA-hosted carrier document, 2026-04 |
| Lincoln WealthAccumulate 2 IUL (2020) | Lincoln National Life Insurance Co. | 1% | secondary, BGA-hosted carrier document, 2023-04 |
| Pacific Horizon IUL 2 | Pacific Life Insurance Co. | 1% (up to 4% on other accounts) | carrier document, 2024-11 |
| Allianz Life Accumulator IUL | Allianz Life Insurance Co. of North America | 0.25% | carrier document, 2026-09-01 |
| Instant Decision IUL | Americo Financial Life and Annuity | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Growth IUL II | Ameritas | Not publicly disclosed | no public carrier document found (10/4/2026) |
| QoL Max Accumulator+ III IUL | Corebridge | Not publicly disclosed | no public carrier document found (10/4/2026) |
| QoL Value+ Protector III IUL | Corebridge | Not publicly disclosed | no public carrier document found (10/4/2026) |
| BrightLife Grow (Series 159) | Equitable | Not publicly disclosed | no public carrier document found (10/4/2026) |
| F&G Pathsetter | Fidelity & Guaranty Life Insurance Co. | Not publicly disclosed | no public carrier document found (10/4/2026) |
| John Hancock Accumulation IUL (AIUL 26) | John Hancock Life Insurance Co. | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Compass Elite IUL / EquiFlex IUL | Kansas City Life | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Strategic Accumulator IUL 3 | Midland National | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Strategic Protector IUL 2 | Midland National | Not publicly disclosed | no public carrier document found (10/4/2026) |
| IUL Express | Mutual of Omaha | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Income Advantage IUL | Mutual of Omaha | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Life Protection Advantage IUL | Mutual of Omaha | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Builder Plus IUL 4 | North American | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Smart Builder IUL 3 | North American | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Accumulation Builder Flex IUL | Penn Mutual | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Accumulation Builder Select IUL | Penn Mutual | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Accumulation IUL (successor to Accumulation Builder) | Penn Mutual | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Indexed Universal Life Accumulation II | Principal | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Indexed Universal Life Flex II | Principal | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Indexed Choice UL | Protective Life | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Momentum IUL | Prudential | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Eclipse Accumulator II IUL | Securian | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Orion IUL | Securian | Not publicly disclosed | no public carrier document found (10/4/2026) |
| Accumulator Ascent IUL | Symetra | Not publicly disclosed | no public carrier document found (10/4/2026) |
Producer-only figures are never shown: if an insurer only discloses the minimum to agents, the row reads Not publicly disclosed. Full data, methodology and a CSV download: IUL guaranteed minimum caps.
The difference matters: a 4% minimum cap and a 0.25% minimum cap are very different worst cases for policies that look alike today. And a "0.25% minimum annual index credit" (a floor) is not the same thing as a minimum cap; ask which one you are being shown.
When an IUL still makes sense
None of this means IUL is a bad product. In Hans's opinion, an IUL still makes sense when you need permanent coverage, you can fund it near the max-funded line for 15 or more years, you are young enough for the cost of insurance to stay low while cash value builds (the hockey stick needs time), and you will look at an in-force illustration every year. It makes less sense as a savings plan at 65, as a loan source in the early years, or when the only numbers you have seen are the illustrated ones (why age matters).
Policy loans and withdrawals up to your basis are generally not taxed if the policy is not a modified endowment contract (IRC §7702A) and stays in force; a lapse or surrender with a loan outstanding can create taxable income.
Want to see the guaranteed column on your policy?
Send your annual statement or in-force illustration. Within one business day you get a written read: current vs guaranteed, and which variables matter most for your policy.
Rather talk it through? Or book 15 minutes on Hans’s calendar, or call 213-414-2808.
Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer
Frequently asked questions
Sources
- NFG Brokerage: Transamerica IUL cap rate changes effective 12/16/2023 (carrier notice reposted; secondary)
- Brach Family Foundation v. AXA Equitable, official settlement site (S.D.N.Y. 1:16-cv-00740)
- Top Class Actions, 10/8/2018: Transamerica $195M COI settlement (secondary)
- Legal News Feed, 6/17/2025: Lincoln / Connecticut General $147M COI settlement final approval (secondary)
- Top Class Actions, 2/11/2022: John Hancock $123M COI settlement (secondary)
- WinFlex: Protective Indexed Choice UL discontinued 3/9/2026
- NAIC Actuarial Guideline 49-A (IUL illustrations)
- Nationwide IUL crediting rates (FLM-1491AO)
- Allianz Life Accumulator rate sheet M-8871 (9/1/2026)
- Pacific Life: Pacific Horizon IUL 2 (IUC3996, 11/2024)
- Society of Actuaries, 2017 Loaded CSO, Nonsmoker Male ANB (table 3291)
- Hans Goldstein: IUL guaranteed minimum caps data (10/4/2026)
Hans Goldstein, CA Insurance License #4273294 · NPN 20602398 · Goldstein & Co. LLC dba Goldstein Insurance Services, CA License #6016830
Contact: hans@hansgoldstein.com · 213-414-2808
General education, not tax or legal advice. Tax treatment depends on your facts and on current law, which can change. Talk to your CPA or estate attorney. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Guarantees apply only to the contractual terms of the policy. Caps, participation rates, loan rates, charges and dividends are not guaranteed and can change. Hypothetical. Not an illustration of any specific policy. Not a quote. Illustrated (current) values are not guaranteed; the guaranteed column is the only promise in a policy. Hans is paid a commission by the insurer if you buy a policy through him. For life insurance, ask and he will tell you what he earns on your specific policy. Product and company names are trademarks of their owners. Goldstein Insurance Services is an independent agency, not affiliated with or endorsed by any insurer named here. Life insurance requires underwriting; not everyone qualifies. This page describes products in general terms; read the policy and the insurer's disclosures before you buy.