No. of Recommendations: 4
I am not a fan of IULs, but there is protection up to the limits set by your state.

Yes, it works until it doesn't. As long as your state covers variable insurance products with the insurance fund, and your account balance is below the insurance limit, and the insurance fund doesn't run out of money, it will work.

Howver, not all states cover variable insurance products (like IULs) with their insurance funds, or if they do, there can be some caveats.

Additionally, if we are talking about 20 (or more) years of accumulations in an account, it is quite possible that the account balance will be in excess of state insurance fund limits, which can be as low as $100k.

The bankruptcy of Executive Life showed the good and bad. Bond holders lost a significant amount of their investment. Policies weren't terminated, but neither did they continue with the same cost structure. Fees were significantly increased.

And 15% of annuity customers had their annuity payment amounts decreased, some by more than 50%. If IULs had been widely sold at that time, IUL account holders in excess of their state insurance fund limits would have taken a haircut, too.

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