Is IUL a scam, or the secret the wealthy use? Neither — and I sell it.

Search "IUL" and you'll find two internets.

In one, Dave Ramsey and the buy-term crowd call indexed universal life overpriced garbage that only exists to pay agents big commissions. In the other, a guy on TikTok in front of a rented SUV explains how an IUL supposedly lets you "borrow from yourself forever" and build wealth "the banks don't want you to know about."

I'm a licensed agent. I sell IUL policies, and term, and whole life. So let me do something unusual for someone in my chair: tell you what the critics get right first.

What the Ramsey side gets right

• Agents earn more selling IUL than term. That's just true, and you should know it walking in. It's why I put it in writing here — if an agent's recommendation happens to always land on the highest-commission product, that tells you something.
• Early cash value is genuinely poor. In the first years of a permanent policy, charges are front-loaded. If there's any real chance you'll need to walk away in the first five to ten years, permanent insurance is probably the wrong vehicle for you, full stop.
• Underfunded IULs fail — a lot. Someone buys an IUL at the minimum premium with the maximum death benefit because that sounds impressive and costs the least per month. For twenty years it limps along. Then the internal cost of insurance, which rises every year with age, starts eating a cash value that was never given a chance to grow — and the policy collapses in the owner's sixties or seventies, exactly when they can't cheaply replace it. When critics say "these things blow up," this is the design they're describing, and they're right about it.
• Most young families need cheap, large death benefit first. If you have two kids, a mortgage, and $150 a month, the math almost always says term. I'll say that in the first meeting.

What the Ramsey side gets wrong

"Buy term and invest the difference" assumes the difference gets invested. Some people do it. A lot genuinely don't — the difference gets absorbed into life. A permanent policy's premium bill is, among other things, forced discipline. That's not a mathematical argument; it's a behavioral one, and money is behavioral.

Some needs don't expire when a term does. A few situations where "just buy term" stops working:

• A child with special needs who will depend on you at 70, when your 30-year term is long gone and new coverage is unaffordable or unavailable.
• Estate and business needs — buy-sell funding between partners, liquidity so heirs don't have to fire-sale an asset.
• People who've already filled their other tax-advantaged space and want another bucket with different rules.
• Locking in insurability while you're healthy. Term expires; so can your health.

"IUL" describes both the worst and some of the best policies sold. Here's the industry's actual dirty secret, and it's not the one TikTok thinks: design and funding decide everything. The same product, from the same carrier, at the same monthly premium, can be built two opposite ways.

The two Marias

Maria 1 and Maria 2 are both 35. Both buy an IUL from the same carrier. Both pay $300 a month.

Maria 1's agent set her death benefit as high as $300/month allows. Big number on the policy, bigger commission for the agent — and almost every dollar she pays goes to covering that large amount of insurance. Her cash value stays thin, the rising cost of insurance leans on it harder every year, and by her sixties the policy is the one from the horror stories.

Maria 2's agent set her death benefit as low as IRS rules allow for $300/month. Less impressive number on paper — and most of every payment builds cash value. Her charges stay small relative to what's in the policy, and it gets structurally stronger as she ages instead of weaker.

Same product name. Same premium. Opposite outcomes. So when someone asks me "is IUL good or bad," my honest answer is: which Maria's policy are we talking about?

If you take one thing from this article, take the question: "Did you minimize or maximize the death benefit for my premium — and why?" Ask it of any agent who proposes an IUL, including me. The answer tells you whether the policy was designed for you or for the commission.

What the TikTok side gets wrong (both sides get a turn)

The "borrow from yourself forever" videos are built on features that exist — policy loans are real, and genuinely flexible — stretched past the truth:

• There's almost nothing to borrow in the early years. The clips showing someone "banking" from a big policy skip the decade of funding (or the enormous premiums) that came first.
• You're borrowing the carrier's money against your cash value, and paying loan interest for it.
• If loans plus interest ever outgrow the cash value, the policy lapses — and the accumulated gains can become taxable all at once. The strategy has a self-destruct condition its salesmen rarely mention — and any tax advantage disappears with it.

Regulators and even the carriers themselves have been publicly pushing back on this marketing for the past couple of years. If someone's pitch avoids saying the words "life insurance" while selling you life insurance, that's the tell.

Where I actually land

• Term first for most families. It's not a downgrade; it's usually the right tool.
• IUL for specific jobs: long horizons, permanent needs, disciplined funding well above the minimum, and always stress-tested below the illustrated rate before purchase.
• Whoever you buy from, make them show you the guaranteed column of the illustration — the worst case the contract promises — before the pretty column.

If you want, we'll sit down, look at your actual situation, and I'll tell you which tool fits — including when the answer is the one that pays me less.