Search “IUL” on TikTok and half the results say it is the greatest financial tool ever invented. The other half say it is a scam. Both sides are wrong. Here is what is actually happening.

The Real Problem: Bad Structure, Not a Bad Product

The Kyle Busch lawsuit put IULs in the spotlight. A NASCAR driver was sold a policy that was over-insured, under-funded, and designed to generate maximum commission for the agent. The policy collapsed. Headlines followed.

But the headlines missed the point. The IUL itself did not fail. The structure failed. Busch was sold too much death benefit and too little cash value funding. That is like blaming a car for crashing when the driver aimed it at a wall.

A properly structured IUL has minimum death benefit and maximum funding. The purpose is cash value accumulation, not insurance coverage. When built correctly, the cost of insurance is low and the growth engine is strong.

Why Critics Say “Scam”

Three reasons come up repeatedly:

1. High commissions. Agents earn large upfront commissions on life insurance. Some agents prioritize their payout over the client’s outcome. This is a real problem, but it is an agent problem, not a product problem. The same conflict exists in real estate, car sales, and every commission-based industry.

2. Unrealistic illustrations. Carrier illustrations often project returns at the maximum rate. A 12% illustrated rate looks great on paper. Actual historical averages are closer to 6% to 7%. When performance comes in below the illustration, clients feel misled. The fix: always look at historical averages, never the maximum projection.

3. “Buy term and invest the difference.” The financial planning community has a decades-old mantra: buy cheap term life and invest the savings in index funds. IUL challenges that orthodoxy. Some critics have a financial incentive to discredit IUL because they sell the alternative.

What the Critics Get Right

Not every IUL is a good IUL. The critics are correct that:

• Poorly structured policies have high internal costs that eat returns
• Agents who do not understand the math can sell harmful policies
• Cap rates and participation rates vary by carrier and matter enormously
• If you do not max-fund the policy, it underperforms

BankLite exists because these problems are real. The solution is not to avoid IUL. The solution is to build it correctly with minimum death benefit, maximum funding, and a carrier with competitive cap rates.

The Math Nobody Shows You

A properly structured BankLite IUL with $25,000 annual funding, started at age 35:

• Cash value at age 65: approximately $1.2 million (at 6.28% historical average)
• Tax-free retirement income: approximately $80,000 to $100,000 per year via policy loans
• Death benefit: passes to heirs tax-free
• Cost of insurance: approximately 0.5% to 1% of cash value annually (with minimum death benefit)

Compare that to a 401(k) with the same $25,000 annual contribution:

• Balance at age 65: approximately $900,000 to $1.1 million (at 7% gross, taxed on withdrawal)
• After-tax retirement income: approximately $55,000 to $70,000 per year (taxed at income rates)
• No death benefit
• Required minimum distributions force withdrawals on the IRS schedule, not yours

The IUL provides more accessible income, tax-free, with a death benefit, and no required distributions. The 401(k) provides tax-deferred growth with an employer match advantage. Both have a place. Neither is a scam.

The Bottom Line

IUL is not a scam. It is a financial tool that works extremely well when structured correctly and fails when it is not. The difference between a good IUL and a bad one is the advisor who builds it.

If you want to see how a properly structured BankLite policy looks with your specific numbers, schedule a free analysis. No pressure. Just the math.