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What we are seeing so far, with inaccurate figures,

The figures are accurate.
There may be errors in the methodology, but quick&dirty back-of-the-envelope checks out to be within a few percent. So it's pretty close.

Pending further examination by another set of eyes, of course.

... is that if you are willing to lose up to 50% of your money but wait 10, 15, 20 years for recovery (or as long as it takes,) *then* you may end up better off in a naked S&P position.

Same answer I just gave CC.
The S&P had TWO 50% drawdowns, and yet still ended up with a much higher final value. Even though the foolish S&P investor lost 50% of his money twice, and the IUL investor didn't ever lose any money (other than fees.)

If a 50% drawdown is acceptable, its easy enough for me to build that into the hedged model as well... but we haven't got that far in ironing out a reliable model on the simpler basics yet.
No particular need for you to develop a hedged model. An IUL is already complex enough --- no need to toss some kind of hedge on top of that and make it even *more* complex.

Hey, here's an idea. Let's put some search term into Google, or visit Mel Faber's site. Let's, maybe, try a naive little strategy that doesn't even involve options or bull or bear or whatever spreads. Let's try a simple little grade-school strategy of looking at the 10 month Simple Moving Average of the S&P500.
Or, heck, if we want to throw simple to the winds, we could even try a 200 day SMA. Which every stock quote web site already will show you--so many people like to look at it that it is a pre-programmed default.

And guess what? The maximum drawdown isn't 53% It's 26%.
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