Index Universal Life Insurance (IUL), Explained in Response to George Kamel

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From Grateful Client to Concerned Professional

 

I’ve been a huge fan of Dave Ramsey for over a decade. My wife and I went through the Baby Steps program nearly eight years ago thanks to our friends Kevin and Felicia, who introduced us to it during a Bible study in Vero Beach, Florida. It helped us escape overwhelming credit card debt and take control of our finances when we were just starting out.

So let me be clear from the start: I am deeply grateful for what the Ramsey organization has done in my life.

But as someone who now works full-time in financial services, I’ve come across an area where their advice doesn’t quite hit the mark: Indexed Universal Life Insurance (IUL).

Why I Had to Respond

A few days ago, I watched George Kamel’s video titled “Indexed Universal Life Insurance Explained.” It frustrated me, not because of a difference in philosophy, but because so many of the points he made about IULs were either outdated or simply incorrect.

So this post isn’t an attack.

It’s a respectful clarification. A chance to correct a few misconceptions. And if anyone from the Ramsey team wants to talk, I’d genuinely welcome the conversation.

Let’s Clear This Up: Is an IUL an Investment?

One of the first and most repeated claims George makes is that an IUL is an investment account tied to the stock market.

That’s false.

Indexed Universal Life is a form of permanent life insurance that includes a cash value component. This cash value mirrors the performance of a market index like the S&P 500 or BlackRock’s Endura Index, but it is not invested in the market.

Your money is never at risk of market loss. Why? Because the cash value is protected by a 0% floor. If the market drops, your value doesn’t. If the market climbs, your policy benefits, up to a cap or participation rate.

And no, calling it an “investment account” is not only incorrect, it’s also something that could get a licensed agent in trouble. We don’t market IULs that way because we’re not selling securities.

About Fees and Commissions

George paints IUL agents as profit-driven salespeople making sky-high commissions. Let’s unpack that.

Here’s the reality:

  • Term life insurance commissions can be 100% of the premium.
  • IUL commissions? Typically 40–50% of the target premium, which is not the total amount you’re contributing.

For example, if someone funds an IUL with $100,000 a year for five years, only about 15–20% of that amount goes toward insurance costs. The rest builds tax-advantaged cash value. And agent commissions apply only to that 15–20%, not the full contribution.

So no, IUL commissions aren’t outrageous. In fact, in properly structured policies, they’re much lower than term in percentage terms.

Structure Is Everything

This is the real heart of the matter.

97% of agents don’t know how to structure an IUL correctly. That’s not an insult. That’s a quote from Doug Andrew, a veteran of the life insurance industry.

Improperly designed IULs focus too heavily on death benefits and not enough on cash accumulation. That’s when fees become a problem. That’s when returns disappoint. That’s when clients feel misled.

But when an IUL is max funded and structured properly, it becomes one of the most versatile and powerful tools in personal finance.

You can:

✅ Access your money tax-free
✅ Protect against market downturns
✅ Leave a legacy with both death benefit and cash value
✅ Use the policy as collateral for tax-free loans
✅ Strategically leverage your policy without ever withdrawing your principal

What About "Borrowing Your Own Money"?

George ridicules the idea of taking loans against your policy and paying interest “to yourself.”

But that’s exactly how the strategy works.

You don’t remove the money: you collateralize it. So your full cash value continues to grow. The interest you pay goes back into your account. You’re paying to access liquidity, without interrupting compounding growth.

Want even more flexibility? You can:

  • Choose not to repay the loan at all (it just reduces your final death benefit)
  • Repay it via additional premiums and get a better internal rate of return
  • Roll it forward and leverage it in a growth strategy

Do You Lose the Cash Value When You Die?

Another big inaccuracy.

George claims your family only gets the death benefit, not the cash value.

That might be true in poorly designed or outdated policies.

But in a properly structured IUL? Your beneficiaries receive the death benefit plus the accumulated cash value. This is precisely what makes these tools such powerful instruments for estate planning and generational wealth transfer.

So Why the Hate?

If I had to guess, the term life agency that partners with Ramsey Solutions is only exposed to the worst IULs on the market. And unfortunately, a lot of those exist. Badly structured. Poorly explained. High-cost. Low-performance.

But don’t throw out the strategy just because it’s often misused.

Would you dismiss real estate because some people lose money flipping houses?

Would you reject the entire stock market because some people invest badly?

It’s not the tool—it’s how you use it.

Final Thoughts: It’s Time for a Nuanced Conversation

If you’re still reading, I appreciate your open mind.

IULs aren’t magic. They’re not a replacement for budgeting, saving, or discipline.

But when used correctly, they offer:

  • Tax-free growth
  • Downside protection
  • Flexible access to capital
  • Legacy planning power
  • Protection from volatility and taxes

That’s worth a conversation.

So if you’re wondering whether an IUL might work for your family, your business, or your retirement strategy, we’d love to talk.

Book a Free IUL Strategy Call

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