The IUL Cash Value Trap: How Your Retirement Asset Becomes a Death Benefit Liability
The phone call usually comes 15 to 25 years into the policy. The client — who was sold a retirement accumulation story — hears from their agent that the policy is "underfunded" and needs additional premium to stay healthy. What is never said clearly is this: your retirement asset has already stopped being one. The moment you're paying to keep the policy alive rather than building cash, the product has structurally transformed into something else — a death benefit structure that you're now maintaining, not an asset you're growing.
That transition is not a malfunction. It is the product working exactly as designed. Understanding why requires understanding the Cost of Insurance — and what happens when it meets an index with a cap.