No. of Recommendations: 2
My conclusion is that either I made a mistake, the Monte Carlo calculator is wrong, or the IUL guarantee is virtually worthless.

It's not so much that the guarantee is worthless. It's mostly that they are (arguably) overcharging for the policy and using part of that overcharge to cover the down periods.

Looking at the return distribition I posted, 43% of the time you hit the cap and got 12% instead of ~22%. That's 10 points of opportunity cost.

At the other end, 28% of the time you got saved by the floor and avoided a ~10% loss.

Back of envelope math says: opportunity cost = 43% of 10% for protection against 28% of 10%. IOW, the cap hurts you more than the floor helps you.

Not to mention the ~3% dividend that you don't get.
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