You found it. This hidden educational tool reads the structure of an existing IUL policy — funding, index strategy, loan architecture, illustration math, and rider coverage — and surfaces structural flags in code-review style. It is a starting point for a conversation with a licensed advisor, not a substitute for one.
Educational diagnostic only. Not financial, tax, insurance, or legal advice. Outputs reflect industry norms for the policy type entered and are not a recommendation to act on any existing contract. Always consult a licensed insurance professional.
IUL Auditor
A code-review of an existing Indexed Universal Life policy. Enter the structural parameters from your in-force illustration or annual statement — the Auditor reports structural flags against IUL norms, never recommends action.
Audit: the tool checks 25 structural rules across MEC proximity, funding split, DB option fit, index strategy mechanics, loan structure, illustration sanity (AG-49A), surrender liquidity, and rider coverage — and projects four cash-value paths to test lapse resistance.
Insured Profile
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Policy Structure
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Selection does not constitute endorsement. Used only for known-quirk flagging where applicable.
Funding
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Index Strategy (Primary)
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Current Values
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Loan Structure
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Riders & Provisions
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IUL Auditor — Findings
Educational diagnostic only. The Auditor surfaces structural facts about the parameters you entered. It does not recommend that you surrender, exchange, replace, buy, or sell any policy. Every finding ends with a "consult a licensed advisor" line for that reason.
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Findings
Each finding cites the measured value, the industry norm for the policy type entered, and why the gap matters — then defers to a licensed advisor for any action.
Lapse Stress — Four Crediting Scenarios
Cash value path from current age through age 95, under: illustrated rate, historical median (illustrated × 0.85 capped at 6%), floor only, and a sustained 0% credit. A scenario hitting zero before age 90 is a structural lapse risk.
The Honest Read
The 25 structural checks in this tool reflect public IUL norms and regulatory guidelines — including IRC §7702 / §7702A (MEC, life-insurance qualification), NAIC Actuarial Guideline 49A (illustration limits), and standard accumulation-IUL design principles. The math here is illustrative, not a carrier in-force re-illustration. Bring the findings list, your in-force illustration, and your most recent annual statement to a licensed life insurance professional before changing any policy provision.
Eight Lenses the Auditor Reads Your Policy Through
1. MEC Proximity (IRC §7702A)
7-pay test, 100% trigger
Cumulative premium versus the carrier's 7-pay limit. Crossing 100% creates a Modified Endowment Contract for life — loans and withdrawals become LIFO-taxed to the extent of gain.
2. Funding Split (Base vs PUA)
40–60% PUA norm
Max-funded accumulation IULs typically route 40–60% of premium to the PUA rider. Sub-15% PUA on an accumulation policy is the classic commission-optimized footprint.
3. DB Option Fit
Option A for accumulation
Option A (level) minimizes net-amount-at-risk and cost-of-insurance drag as cash value grows. Options B and C raise the COI drag — appropriate only when the policy intent is death benefit or premium recovery, not accumulation.
4. Index Strategy Mechanics
Cap, floor, participation, spread
A "double-cap" (sub-100% participation combined with a sub-10% cap) layers two limits invisibly. A negative floor exposes principal to index losses. Spreads above 3% on uncapped strategies convert "uncapped" into an effective cap.
5. Loan Architecture
Variable / Fixed / Wash
Variable loans amplify gains and losses on the loan portion. Wash loans (loan rate = crediting rate on loaned CV) zero out the spread. Loan-to-CV ratios above 50% without overloan protection are the classic IUL lapse setup.
6. Illustration Sanity (AG-49A)
5.5–6.5% typical max
NAIC AG-49A caps the maximum crediting rate an illustration can show, based on the lookback math of the strategy. Illustrations above 7% — particularly on volatility-controlled indices — are either pre-2020 or non-compliant.
7. Surrender Liquidity
10–15 year norm
Surrender charge schedules extending past the stated retirement income year create a liquidity mismatch — cash surrender value is materially less than reported cash value during this window.
8. Rider Coverage
Overloan, LTC, NLG
Overloan protection is essential for any policy structured for tax-free retirement income via loans. Chronic illness / LTC accelerators are typically low- or no-cost and become inaccessible once age advances.
What the Auditor Does Not Do
The Auditor does not recommend that you surrender, exchange, replace, buy, or sell any policy. It does not calculate agent commission. It does not model 1035 exchanges or premium financing. It does not constitute suitability analysis. Every finding ends with "Consult a licensed advisor about [specific topic]" for those reasons.
Sources: IRC §7702 / §7702A (life insurance qualification, Modified Endowment Contract rules); NAIC Actuarial Guideline 49A (illustration limits, adopted 2020 with subsequent revisions); standard accumulation-IUL design literature; Society of Actuaries research on IUL crediting mechanics; ACLI guidance on overloan protection rider implementation.
