Indexed Universal Life (IUL) vs 401(k)

Compare tax-free retirement income via IUL policy loans against tax-deferred 401(k) withdrawals with employer matching.

Your Information

Timeline

Current Age35 years

18 years70 years

Retirement Age65 years

36 years80 years

Life Expectancy90 years

66 years100 years

Savings

Starting Balance$50,000

$0$500,000

Annual Contribution$15,000

$0$50,000

Expected Market Return7%

1%12%

IUL Parameters

Cap Rate10%

5%15%

Floor Rate0%

0%3%

Policy Loan Rate2%

0%8%

401(k) Parameters

Employer Match50%

0%100%

Tax Rates

Current Tax Bracket24%

10%37%

Retirement Tax Bracket22%

10%37%

Retirement Withdrawals

Annual Withdrawal$60,000

$10,000$200,000

IUL

Tax-Free Income

Total Premiums$500,000

Net Growth$4,821,547

Taxes Paid-$108,000

Net Income$1,500,000

401(k)

Employer Match

Total Contributions$500,000

Growth + Match$7,540,902

Net Taxes-$802,161

Net Income$3,226,936

401(k) provides more retirement income

$1,726,936 more (53.5%) over your retirement

+53.5%

Tax Savings with IUL

IUL policy loans are tax-free, potentially saving you $694,161 in taxes compared to 401(k) withdrawals over your retirement. However, 401(k) offers employer matching and lower fees.

Projections

IUL Advantages

✓Tax-free retirement income via policy loans
✓Downside protection (0% floor rate)
✓No RMDs required
✓Tax-free death benefit for beneficiaries
✓No contribution limits

401(k) Advantages

✓Employer matching (free money!)
✓Lower fees than IUL
✓Immediate tax deduction on contributions
✓Full market upside (no cap rate)
✓Simpler product structure

Year-by-Year Projection

Age	IUL ValIUL Value	IUL TaxIUL Taxes	401k Bal401(k) Balance	401k Tax401(k) Taxes
36	$68,575	-$3,600	$72,760	+$3,600
41	$177,946	-$3,600	$212,809	+$3,600
46	$320,888	-$3,600	$409,235	+$3,600
51	$507,709	-$3,600	$684,732	+$3,600
56	$751,876	-$3,600	$1,071,131	+$3,600
61	$1,070,993	-$3,600	$1,613,076	+$3,600
66	$1,412,241	$0	$2,293,922	-$13,200
71	$1,545,673	$0	$2,872,301	-$13,200
76	$1,784,677	$0	$3,392,219	-$30,637
81	$2,168,386	$0	$3,791,087	-$42,213
86	$2,748,643	$0	$3,990,756	-$57,519
90	$3,399,729	$0	$3,903,805	-$71,249

Send My Results to Owen

Get a personalized review of your comparison from Owen Thompson at Focus1 Insurance Group.

Disclaimer: This calculator provides simplified estimates for illustrative purposes only. IUL policies vary significantly by carrier. Actual IUL performance depends on index performance, cap/floor/participation rates, cost of insurance charges, and policy structure. 401(k) returns depend on investment selection and market performance. Consult with a qualified financial professional before making investment decisions.