CHRISTOPHER JOHN MAGEE Life · Annuities · Sacramento Request →
PlannerIndexed universal life · Annuities · Education only

See how the pieces fit, before you talk to anyone.

Five quick questions, then two hands-on explorers: one for indexed universal life, one for fixed and fixed indexed annuities. Move the sliders, watch the hypothetical charts respond, and read what each moving part really does, including the parts that cost you.

Education only. Every number is hypothetical.
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Your starting point

Five questions. No names, no forms.

Your answers stay in this browser tab. Nothing is sent anywhere. They only pre-set the explorers below so the first example you see is closer to your situation.

Step 1 of 5 Goal
What should the money do first?

Pick the closest. You can change it later.

Hands-on · hypothetical

Move the sliders. Watch what changes.

Both explorers use deliberately simple math, written out in plain English below each chart, so you can see the shape of how these products behave. They are not how any insurance company prices a contract.

Read this first

Education only. All figures on this page are hypothetical and are not a quote, illustration, offer or guarantee of any future value. Results vary. Products, features, caps, participation rates, crediting rates and charges vary by insurance company and by state, and can change. Guarantees are backed by the issuing insurance company's claims-paying ability. Insurance and annuity products are not bank deposits and are not FDIC or NCUA insured. Nothing here is tax, legal or investment advice; talk to a licensed insurance professional about your situation, and to a tax advisor about tax questions.

Look here first

Explorer 01 · indexed universal life

How cash value and coverage move

IUL in depth →

An average for the whole period. Real index credits jump around year to year, and the actual rate is whatever the index formula produces.

Cap and floor (example only)
9%Cap
0%Floor
100%Participation

Hypothetical example terms. The cap limits a good year; the floor means a 0% credit in a down year, but policy charges still come out. Insurance companies can change caps and participation rates.

Hypothetical cash value and death benefit

Cash valueDeath benefitCash value at 2%
Hypothetical cash value and death benefit by yearLine chart. Updates as you move the sliders.
Hypothetical$0Cash value, year 20
Hypothetical$0Death benefit that year
Hypothetical$0Total premiums paid by then
HypotheticalNoneLapse risk marker

Hypothetical example – not a quote, illustration or guarantee

This is not an illustration. A real policy illustration comes from the insurance company, uses that company's own charges, and shows guaranteed and non-guaranteed columns side by side. The model here is a teaching sketch with made-up charges. Values shown are before surrender charges, which make early-year exits expensive. Use it to understand the shape, never to decide.

How an IUL works, in plain English

  1. PremiumYou pay in. Within limits, you choose how much and when.
  2. ChargesCost of insurance, admin and premium loads come out every year, credit or not.
  3. Index creditingInterest is credited using an index formula, held between a floor and a cap, times a participation rate.
  4. Cash valueWhat is left after charges, plus credits, builds inside the policy.
  5. Policy loansYou can borrow against cash value. Loans accrue interest and reduce the death benefit.
What it costs
  • Cost of insurance (COI): the charge for the death benefit itself. It rises with age, which is why a policy that was never funded well can strain later.
  • Administrative and per-unit charges: flat monthly fees and charges per $1,000 of coverage, often heavier in the early years.
  • Premium load: a percentage taken from each premium before it reaches the cash value.
  • Rider fees: any added features (for example, chronic illness or no-lapse riders) carry their own charges.
  • Surrender charges: leaving in the early years can return less than you paid in.
What the floor does, and what it does not
The floor (often 0%) protects the credited interest: a down index year credits nothing rather than a loss. It does not protect you from charges. Those still come out in a zero-credit year, so cash value can go down. Your premiums are not placed in the stock market, and you receive no dividends from the stocks in the index.
Caps and participation can change
Caps, participation rates and spreads are generally not guaranteed beyond their stated minimums. The insurance company can lower them after you buy, which is why a design that only works at a high assumed rate does not really work. Look at the conservative and guaranteed columns of a real illustration first.
Loans, lapse and taxes
  • Policy loans accrue interest, reduce cash value and the death benefit, and can cause the policy to lapse if they grow too large.
  • A lapse or surrender with a loan outstanding can create taxable income.
  • Funding past the seven-pay limit makes the policy a modified endowment contract (MEC), which changes how loans and withdrawals are taxed.
  • The policy can be income-tax-advantaged only when it is properly structured, is not a MEC, and stays in force. Your tax advisor should confirm how this applies to you.
Look here first

Explorer 02 · fixed and fixed indexed annuities

How a deposit grows, then pays

A declared rate for a set term. Rates change with interest rates and vary by insurance company, term and amount.

Illustrative payout rate at income start (hypothetical)5.50%

From a simple age table in our notes, not any insurance company's rates. Real lifetime payouts depend on the contract, rider, interest rates, and single or joint life.

Hypothetical value before income starts

Contract valueDepositExample surrender period
Hypothetical annuity value by yearLine chart. Updates as you move the sliders.
Hypothetical$0Value when income starts
Hypothetical$0Monthly income estimate
Hypothetical$0Annual income estimate
Hypothetical0Age income starts

Hypothetical example – not a quote, illustration or guarantee

Example surrender schedule

A hypothetical 7-year schedule: the percentage charged if you take out more than the allowance in that contract year. Real schedules vary by contract and can be longer.

7%
6%
5%
4%
3%
2%
1%
0%
Penalty-waived withdrawalsMany contracts allow a penalty-waived withdrawal allowance, often around 10% of the value a year. It varies by contract.
Market value adjustmentSome contracts add an MVA on early exits that can raise or lower what you receive, depending on interest rates.
Before age 59½Withdrawals before 59½ can carry a 10% federal tax penalty on top of ordinary income tax. Reaching 59½ does not waive surrender charges.
Rider feesIncome riders carry annual fees, and the "income value" a rider quotes is not a balance you can walk away with.
Claims-paying abilityEvery guarantee rests on the issuing insurance company's claims-paying ability, so its strength matters as much as the rate.
30-day review periodCalifornia buyers 60 and over get 30 days after delivery to review the contract and return it.

Side by side

Which fits you? Each has a different job.

General traits only. Contracts differ, and the right answer can also be whole life, term, or leaving money where it is.

FeatureIndexed universal lifeMatches your answersFixed annuityMatches your answersFixed indexed annuityMatches your answers
Primary jobPermanent death benefit for the people who count on you, with cash value credited using an index.Grow a lump sum at a declared rate for a set term; it can later be turned into income.Keep market losses out of the contract while crediting part of index gains; often paired with an income rider.
GuaranteesA floor on index credits (often 0%). Charges, caps and participation are not fixed, and an underfunded policy can lapse.The rate is written into the contract for the term. Backed by the insurance company's claims-paying ability.Credits cannot fall below the floor; caps and participation can change. Income guarantees come from rider terms.
LiquidityPolicy loans and withdrawals against cash value; surrender charges in early years; loans reduce the death benefit.A penalty-waived allowance (often around 10% a year); surrender charges and possibly an MVA beyond that.Same pattern: a yearly allowance, a surrender schedule, and possibly an MVA.
CostsCost of insurance (rises with age), premium load, admin and per-unit charges, rider fees, surrender charges.Usually no annual fee; the cost is mostly liquidity, through surrender charges on early exits.Rider fees come out whether the index is up or flat; surrender charges on early exits.
Who it tends to fitYou need permanent coverage, can fund steadily for a decade or more, and already use other tax-advantaged accounts.You want a known rate for a known term and can leave the money alone.You want some index-linked upside with a floor, and income within about ten years.
Watch-outsFunding for two years and stopping; designs that only work at high assumed rates; loans that grow too large.The rate holds only for the term and may renew lower; the 59½ penalty; money locked through the surrender period.A rider's "income value" is not a walk-away balance; caps can drop; fees can exceed credits in flat years.

If contractual certainty matters more to you than upside, whole life may be the better fit for protection. See also IUL vs whole life and should I buy an annuity at 60?

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Only an insurance company's illustration or quote shows what a specific contract would do, with guaranteed and non-guaranteed columns side by side. We will walk you through one, with the surrender schedule and every rider fee on the same page.

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About this planner

Education only. All figures on this page are hypothetical and are not a quote, illustration, offer or guarantee of any future value. Results vary. Products, features, caps, participation rates, crediting rates and charges vary by insurance company and by state, and can change. Guarantees are backed by the issuing insurance company's claims-paying ability. Insurance and annuity products are not bank deposits and are not FDIC or NCUA insured. Nothing here is tax, legal or investment advice; talk to a licensed insurance professional about your situation, and to a tax advisor about tax questions.

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