No. of Recommendations: 1
I found a Monte Carlo investment calculator and decided to see how the risk of stock investing compares with a guaranteed no loss investment. I set up a scenario to match Dave's Allianz sheet : a premium of $15,000 to start plus $1800 a year.
I used the last column in Dave's sheet, labeled "Total Deductions" as the total fees. Then I imagined that the guarantee meant that at any time you could take out all the premiums you paid with no costs. I considered two cases: the case where there were no fees charged and you got all your premiums back, and the case where you got your premiums back minus the total fees.

I then used the Monte Carlo calculator at to calculate the success rate of investing the premiums in their "moderate risk” portfolio, which has an allocation between stocks/bonds/international of 41/45/14. I set tax rates and inflation rates to zero. Below is the probability of having a portfolio large enough to withdraw all the premiums, both with and without fees:

Year no-fee success rate success rate with fees
2 79% 99.6%
3 87% 99.8%
4 91% 99.9%
5 94% 99.9%
6 96% > 99.9%
7 97%
8 98%
9 98%
10 99%

Over any reasonable timeframe, this portfolio almost never has less money than the premiums minus the fees. My conclusion is that either I made a mistake, the Monte Carlo calculator is wrong, or the IUL guarantee is virtually worthless.
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