Deconstructing the sales pitch of IULs. Understanding participation rates, caps, and internal costs of insurance.
The Data
Recent data from 2023 indicates significant shifts in this sector. For example, average premiums have adjusted by roughly 14% year-over-year due to macroeconomic pressures and claims inflation.
| Scenario | Expected Cost | Risk Mitigation |
|---|---|---|
| Low Severity, High Frequency | $1,500 | Self-insure (High Deductible) |
| High Severity, Low Frequency | $500,000+ | Transfer Risk (Policy Limits) |
Strategic Application
Implementing the correct structure here involves looking at your liquid reserves. Never insure a risk you can easily afford to cover out of pocket. Insurance is for catastrophic loss.