Is indexed universal life a good investment?

For most people, no. The cash value earns index-linked credits with caps and floors, minus insurance charges and fees that rise with age. The illustration you are shown uses projected returns that are not guaranteed. For the same death benefit, term life costs a fraction, and investing the difference in an ordinary account usually ends up ahead.

What is the infinite banking concept?

A sales framework in which you overfund a whole or universal life policy, then borrow against its cash value instead of using a bank, repaying yourself with interest. The mechanics are real, policy loans exist, but the returns are policy returns minus loan interest, and the premiums are far higher than term.

What should I ask before buying an IUL?

The guaranteed column of the illustration, not the projected one; the total annual charges; what the same death benefit costs as term; the surrender charge schedule; and what happens to the policy if you stop paying premiums in year eight.

Written by PolicyChat Life, a licensed life insurance agency. Estimates come from the same pricing tables our chat, Sage, uses; they are not quotes. Updated 2026-09-18.

Last updated September 2026 · PolicyChat Life.

Indexed universal life and “infinite banking”: a pitch check

Short answer. IUL and infinite banking are cash-value life policies sold on projections. The death benefit is real, the policy loan is real, and the premium is many times what term costs for the same coverage. Ask for the guaranteed column, the fees, and the term price for the same death benefit. For most families, term plus ordinary investing does the same job for less.

One in nine life insurance conversations people have with an AI assistant is about checking one of these pitches. Here is the check.

The five claims and what is true in each

The pitch says	What is true	What to ask
“Tax-free retirement income”	Policy loans are not taxed while the policy stays in force	What happens if the policy lapses with a loan outstanding (the gain becomes taxable)
“Market upside with no downside”	Index credits have a floor, often 0%, and a cap, often 8 to 10%	What the cap is, who can change it, and the participation rate
“Be your own bank”	You can borrow against cash value at the carrier’s loan rate	The loan rate versus the credited rate, and the spread you actually earn
“It builds wealth”	Cash value grows after charges	The guaranteed column of the illustration, and total annual charges by year
“Better than term”	The death benefit is permanent	The premium for the same death benefit as 20- or 30-year term

The plain comparison

Take the IUL premium. Subtract what term costs for the same death benefit. Invest the difference in a plain index fund. Compare the two balances at year 20 using the guaranteed column, not the projection. That arithmetic is the whole decision, and the person selling the policy should be willing to do it with you.

When a cash-value policy is right

Permanent needs: a dependent who will outlive you, estate liquidity, equalizing an inheritance, or a business buy-sell. Or a saver who has filled every tax-advantaged account and wants a conservative guaranteed component. In those cases whole life with a strong guaranteed column is usually the cleaner product.

If you already own one

Do not cancel it in a meeting. Request an in-force illustration, compare the guaranteed column to what you were shown, and price term for the same death benefit. A PolicyChat agent will do that with you at no charge. Never let a policy lapse before a replacement is in force.

See your own number. Sage sizes the coverage, asks three plain health questions, and shows the price range you'd actually get, before anyone asks for your phone number.

Ask Sage: I have a policy, check it or re-shop it

PolicyChat Life is a licensed life insurance agency. Every policy comes with a free-look period, usually 10 to 30 days depending on your state, with a full refund.