Welcome, everyone, to part two of our Indexed Universal Life Sales Academy, powered by our friends at Ameritas. In this session, we will focus on how to position indexed universal life in your sales presentations.
For those of you who don’t know me, my name is Matt Alina, and I manage the Life Markets team here at URL Insurance Group. Our team is dedicated to providing the training and resources you need to grow as a professional in the insurance industry and to grow your revenue as well.
Last week’s session served as an introduction, where we began exploring indexed universal life and its role in a fast-growing segment of the life insurance market. Today is part two of our four-part series, and the focus is on sales positioning.
I’d like to reintroduce our experts from Ameritas. Joining us again are Dylan, the Regional Vice President, and Kevin Bay Tripp, the Internal Wholesaler. In part one, they did an outstanding job explaining what indexed universal life is, how it works, and why it’s gaining traction. Today’s discussion is again a roundtable format.
To briefly recap part one, we discussed what an indexed universal life policy is, emphasizing that it is first and foremost a life insurance policy with cash values tied to market indices. We talked about why these policies are becoming increasingly popular and compared whole life, universal life, and indexed universal life.
One of the common questions that came up was around Dave Ramsey’s criticism of indexed universal life. Dylan and Kevin explained that Dave Ramsey typically targets younger, more aggressive investors. Indexed universal life is not designed for that demographic. It’s designed to supplement existing investments, provide life insurance protection, and serve individuals who are more conservative or closer to retirement. People in their forties, fifties, and sixties often don’t have the time to recover from significant market losses, and indexed universal life addresses that concern through downside protection with floors while still offering upside potential through caps.
We also covered the seven red flags of a bad indexed universal life policy. Ameritas put together a helpful resource that outlines issues such as inconsistent cap rates, volatile fund selections, cap rate disparities, benchmark index manipulation, loan arbitrage abuse, aggressive strategies, and offshoring liabilities to enhance earnings. If anyone would like access to that resource, feel free to email me and I’ll send it over.
With that recap complete, we moved into part two and discussed how advisors can make a compelling case for clients to consider indexed universal life.
Dylan explained that indexed universal life is permanent life insurance and offers the highest cash value accumulation potential among permanent products. The appeal lies in the upside potential combined with downside protection. Clients are indirectly participating in the market, receiving death benefit protection and often living benefits, while being protected from direct market losses. Compared to whole life, indexed universal life typically has a lower cost of insurance and is most often used as a retirement income supplement, though it has many additional applications.
Kevin added that most clients who are not using indexed universal life are investing somewhere else. While traditional investments may offer higher upside potential, they are typically taxable. Taxes can significantly reduce income or shorten the duration of distributions. He shared an example where a taxable investment produced $33,000 in annual income but ran out several years sooner than an indexed universal life strategy, resulting in a substantial loss over time. The tax-free nature of indexed universal life can be a major advantage, even though it comes with trade-offs like caps.
We then talked about policy guarantees. Many indexed universal life policies do not project a no-lapse guarantee to age 100. I shared my experience with older universal life policies that struggled when interest rates declined, leading to lapse notices. Insurance companies responded by introducing guaranteed universal life policies with lifetime guarantees.
Kevin explained that the guaranteed column in an indexed universal life illustration assumes a worst-case scenario where the index credits zero every single year. While possible, it’s extremely unlikely. If the S&P 500 were to stay flat or negative for decades, we would have far bigger problems than a life insurance policy. Emeritas illustrates conservatively, using a non-guaranteed rate around 5.92 percent, even though long-term market averages are higher. The philosophy is to under-promise and over-deliver.
Dylan added that sustained zero performance over the life of a policy is unrealistic, and conservative assumptions help demonstrate that policies typically last well beyond the guaranteed column.
We then discussed funding strategies. I asked whether advisors should consider maximum funding without triggering MEC status to enhance cash value growth and policy strength. Kevin confirmed that funding at target premium or maximum non-MEC premium generally provides the strongest cash value accumulation. He explained how illustrations can be structured using increasing death benefits during funding years to reduce cost of insurance, then switching to level death benefits once premium payments stop to maximize efficiency.
We also talked about family and household protection. Dylan explained that indexed universal life is commonly used for children, often referred to as the “million dollar baby” concept. At Ameritas, children can be insured starting at two weeks old. Modest monthly premiums funded from birth can create significant cash value later in life, which can be used for college, a home down payment, or retirement. Parents and children can both be insured, and in some cases multi-policy discounts are available.
Kevin added that Ameritas offers a lifetime income rider that functions similarly to a pension, providing guaranteed supplemental income later in life. Given the uncertainty surrounding future Social Security benefits, this can be a valuable planning tool. The rider doesn’t cost anything unless it’s used, and clients still retain access to policy loans for other needs. If living benefits are never used, the death benefit remains tax-free for beneficiaries.
We then moved into business applications. Kevin explained how indexed universal life can be used for key person insurance, where the business owns a policy on a critical employee to help cover financial loss, training, and replacement costs. He also discussed buy-sell agreements, where life insurance provides liquidity to buy out an owner’s interest and ensure business continuity.
Dylan added that buy-sell agreements are especially useful when business owners don’t have heirs interested in taking over the company. A key employee can use the death benefit to purchase the business and keep it running successfully.
We also discussed executive bonus and dual executive reward strategies, often referred to as golden handcuffs. These strategies help recruit, retain, and reward key employees. Kevin explained how a policy can be structured with a service period, after which the employee receives a lump sum or ownership of the policy. If the employee leaves early, the business retains access to the cash value. While tax considerations should always be reviewed with a CPA and an advanced planning team, these strategies can be extremely effective.
As we wrapped up, Kevin emphasized the importance of understanding the red flags associated with indexed universal life and working with carriers that prioritize transparency. He shared that Ameritas provides easy access to historical crediting and cap rate data, which is uncommon in the industry and builds trust with advisors and clients.
Dylan reminded everyone that indexed universal life is far more versatile than many people realize. It’s not just a retirement tool, but a solution for families, children, and business owners. While the product can seem complex at first, it becomes much easier with education and practice, and both Ameritas and URL are here to support you.
I closed by previewing part three of the series, which will focus on addressing skepticism around indexed universal life. We’ll cover quoted interest rates versus real-world performance, participation rates, caps, floors, and how to manage expectations with clients.
If you have any questions or need support, my team and I are here to help. You can reach me at 717-216-8041 or by email at