No. of Recommendations: 2
1.) A single lifetime catastropic expense equal to 50% of the account highwater value, which hits at the precise low of a 30-50% drawdown. The naked position sells to cover, with the effect on equity forward. The IUL borrows to cover, carrying the burden of the loan and interest going forward.

Talk about 'cherrypicking' - no fair choosing a particular loss point, since the catastrophic expense could happen at any time. You need to show what happens for different timings of this catastrophic expense, not a single point, and provide the results of the various timings.

And which account's 'highwater value' are you choosing? It needs to be the same amount for both accounts - the non-FDA approved surgery isn't going to cost any more or less just because you have a different type of investment account. So, if the highwater mark of the IUL account is X, and the highwater mark of the S&P is 2X, you should pull 0.5X from each account, not 0.5X from the IUL and X from the S&P.

And since you are going to show varying timings, maybe you would want to base the amount that has to be pulled out on the high value of an account up to that point, rather than the entire lifetime. After all, a year or 2 in, neither account is going to be able to pull 50% of the lifetime highwater mark - but, the non-FDA approved surgery requirement just as easily may happen at that time as later on.

2.) An "opportunity exploit" for the IUL each 5 years, requiring 20% of the prior highwater accunt value, for an immediate 100% equity acquisition, and 5% yield on value going forward.

Well, since these are 'wheeler-dealer' type opportunities and 'wheeler-dealers' would be fine borrowing on margin. So, you need to see how the S&P strategy would work using a margin interest cost, at say, prime + 1 for the same scenarios.

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