UpTrajectory Review

Mike Walters' Kiplinger piece argues that indexed universal life insurance, or IUL, has become a serious tool for high earners who have exhausted the familiar tax-advantaged accounts and now face retirement savings that will be taxed as ordinary income on withdrawal. The context matters here: Roth eligibility phases out at higher incomes, so a successful owner-operator can spend decades accumulating wealth in vehicles with no flexibility about when the tax bill arrives. Walters frames IUL as a partial answer. Its cash value grows tax-deferred, and the owner can later reach it through withdrawals and policy loans that generally escape current income tax, provided the contract is structured correctly and stays in force.

For a small-business owner, this is not an abstract estate-planning question. Owners often hold most of their net worth inside the business and in tax-deferred accounts, with no employer 401(k) match and no pension to diversify against. The piece reports that LIMRA recorded record IUL premiums in 2025, up 17% from the prior year. That surge signals that other high earners are confronting the same concentration problem. An owner who sells the business or steps back from daily operations may need income that does not stack on top of a large taxable retirement withdrawal in the same year. IUL, properly structured, offers a bucket that behaves differently from everything else on the balance sheet.

What is genuinely new here is the scale of the shift, not the product itself. IUL has existed for years, but 17% premium growth in a single year suggests financial planners are reaching for it more often as Roth doors close and tax rates look uncertain. We agree with Walters' caution that rising sales do not prove suitability. The article's strength lies in its restraint: it acknowledges that the tax advantage depends entirely on correct structuring and on the policy remaining in force. A lapse or a badly designed contract can erase the benefit and trigger a tax event. That caveat deserves emphasis, because it is where most IUL pitches go wrong.

The second-order effects cut in both directions. High earners gain a tool, but the product rewards discipline and punishes neglect. Premiums must continue; loans must be managed; the index crediting method caps upside in exchange for downside protection. Agents earn commissions, which creates a sales incentive that buyers should discount. Meanwhile, the 17% growth in premiums means insurance carriers are competing harder for this business, which can improve contract terms for buyers who comparison-shop. Owners who ignore this category may find their peers paying materially lower lifetime taxes on the same income, simply because they planned the withdrawal sequence earlier.

Watch two things next. First, whether Congress moves to limit the tax treatment of life insurance loans, since the Treasury has eyed this structure before. Second, whether carriers adjust their index caps and participation rates as interest-rate expectations shift, since those terms determine how much growth actually reaches the policyholder. An owner who wants to explore this should start with a fee-only fiduciary, not a commissioned agent, and should demand an illustration that assumes mediocre returns, not the rosy ones. The question is not whether IUL is good or bad. It is whether your current plan leaves you with enough buckets to choose which tax bill to pay, and when.

“Growing sales do not by themselves establish that a product is appropriate for any client.” — Kiplinger

Takeaway: If you have maxed out tax-advantaged accounts, ask a fee-only fiduciary whether a properly structured IUL could add a flexible, tax-managed income bucket.