Why the Indexed Universal Life lawsuit is a wake-up call



The headlines about the Kyle Busch vs Pacific Life indexed universal life lawsuit sparked the same question I hear from thoughtful families: is my policy designed to serve me, or to serve a sales incentive? This isn’t tabloid noise. It’s a real-world reminder that choices around products, product design, and behavior determine outcomes. When insurance gets framed like an investment, confusion wins—and families pay for the confusion later.




https://www.youtube.com/live/3aLnzmv2dlc




Behind the headlines is a deeper issue many families face: when insurance starts getting pitched as an investment, people get hurt. This indexed universal life lawsuit isn’t just celebrity drama. It’s a cautionary tale about design choices, incentives, and behavior—three ingredients that make or break outcomes.







Why the Indexed Universal Life lawsuit is a wake-up callWhy this Indexed Universal Life lawsuit matters to you1) What actually happened in the Kyle Busch vs Pacific Life case2) What Indexed Universal Life is designed to do (and why the moving parts matter)3) Why Indexed Universal Life is usually a poor fit for Infinite Banking4) The commission conversation: what really matters5) Red flags to spot in any IUL illustration6) The behavior factor: decisions drive outcomes7) Where IUL can make sense—and where it doesn’t8) How to review your current policy or a proposal in 20 minutesWhat this Indexed Universal Life lawsuit teaches usListen to the full episode on the Indexed Universal Life lawsuitBook A Strategy CallFAQWhat is the Kyle Busch vs Pacific Life indexed universal life lawsuit about?Is an indexed universal life policy a good fit for Infinite Banking?Are whole life policies safer than IUL for building cash value?How do agent commissions affect IUL performance?What red flags should I look for in an IUL illustration?Can IUL still make sense for estate planning?What’s the simplest way to protect myself before buying?Is life insurance an investment?What should I do if I already own an IUL?



Why this Indexed Universal Life lawsuit matters to you



Here’s the premise: The Kyle Busch vs Pacific Life indexed universal life lawsuit is shining a bright light on how certain policy designs and sales incentives can set people up for disappointment. Our goal in this article is to unpack what happened at a practical level, explain why it happened, and give you a simple framework to evaluate your own policy or a policy you’re considering.



What you’ll get:




A clear understanding of indexed universal life (IUL) mechanics—caps, participation rates, floors, and charges



Why IUL is often a poor fit for Infinite Banking, and where it can make sense



How agent compensation and death benefit decisions impact performance



The difference between marketing hype and durable guarantees



A short checklist of questions to ask before you sign anything




We’ll speak plainly. We’ll respect your intelligence. And we’ll give you steps to protect your family and your capital.



1) What actually happened in the Kyle Busch vs Pacific Life case



Bruce here. Based on the widely discussed analysis from respected product designer Bobby Samuelson, the policy at the center of this story was a complex indexed universal life contract. The pitch focused on future “income.” The design featured a very high death benefit, which increases internal charges and agent compensation. It also appears the early-year cash value was constrained by both high expenses and allocation choices, and that funding didn’t match the schedule the clients initially expected. The result: heavy costs, lower-than-expected performance, and ultimately a policy lapse after substantial premiums were paid.



Rachel again. Two principles jump out. First, when life insurance is positioned as an investment promising tax-free income, the conversation gets blurry fast. Second, the higher the initial death benefit, the higher the internal costs—especially for a client with added risk factors. Costs matter most in the early years. If they consume the lion’s share of premiums, policy cash value will suffer, and a lapse risk can rise.



Takeaway: A policy can look good on a spreadsheet and still be fragile in real life if the design incentives and assumptions don’t align with your actual goals.



2) What Indexed Universal Life is designed to do (and why the moving parts matter)



Bruce here. IUL ties crediting to an index such as the S&P 500 with caps and participation rates. You don’t get the full index return. You get a portion, limited by the carrier’s rules. You also don’t take index losses; there’s usually a 0% floor for crediting. But there’s a critical nuance: while the index credit can’t go below zero, charges—cost of insurance, policy expenses, riders—still come out. A zero-crediting year can still set you back if expenses outpace gains.



That’s why illustrations are tricky. They show a hypothetical average crediting rate over time. Real markets don’t move in averages, and caps, participation rates, and expenses can change. If early-year charges are high, the policy needs time, consistent funding, and sufficiently strong credited returns to catch up.



Rachel here. I love simplicity and transparency. That’s why, for Infinite Banking, I prefer whole life. You get contractual guarantees on cash value and death benefit, plus the long history of dividends. Is it flashy? No. Is it dependable? Yes.



3) Why Indexed Universal Life is usually a poor fit for Infinite Banking



The Infinite Banking Concept relies on stable, accessible cash value, simple mechanics, and predictable loan behavior. Here’s where IUL struggles for banking use:




Volatility in crediting. Caps and participation rates can shift.



Policy loans can stress the design. Loan interest plus uneven crediting can turn small missteps into big problems.



Moving parts multiply complexity. If you want banking simplicity, fewer moving parts beat more every time.




Could IUL fit some estate-planning use cases? Sure, for certain objectives where the focus is death benefit and there’s no plan to rely on policy loans or income. But for banking—using policy cash value as your family’s capital base—whole life’s guarantees create the clarity and control most people actually want.



4) The commission conversation: what really matters



Bruce here. Let’s talk compensation without the drama. In any life insurance policy, there are upfront costs. Over long horizons, those upfront costs spread out and matter less if the policy is designed and funded well. But design still matters a lot in the early years. A very high base death benefit can push up the target premium and the commission. It can also raise internal charges precisely when you need cash value efficiency.



Rachel again. Ask this one question: How does this design minimize commissions and early-year drag while keeping the policy MEC-safe? In and IUL, like the one mentioned in the lawsuit, that means using a blend structure and, when appropriate, term riders like ART to support premium without bloating long-term costs. If an agent can’t explain—in plain English—how they’re minimizing commissions and internal drag, press pause.



5) Red flags to spot in any IUL illustration



A few practical signals you can use immediately:




The illustration calls life insurance an “investment” or implies market-like returns with no meaningful discussion of costs and moving parts.



Year-1 cash value is tiny relative to premium with no clear rationale.



The design amps the death benefit far above what’s needed to keep the contract non-MEC, without using low-cost term blending when available.



Income projections look aggressive while early-year charges eat most premiums.



Allocations default to a fixed account for years while the pitch centers on index crediting.



The plan depends on perfect behavior—no missed funding, no changes, no down years—for it to work.




6) The behavior factor: decisions drive outcomes



Bruce here. Nelson Nash reminded us: your behavior matters more than the policy. If the plan assumes consistent premium funding, or specific timing for loan repayment, those behaviors must be realistic for your family. A design that only works in a perfect world isn’t a plan; it’s a hope.



Rachel again. Behavior plus guarantees is where confidence grows. I want you to be able to look at your numbers, understand them, and know what to do next—especially when life happens.



7) Where IUL can make sense—and where it doesn’t



We’re not absolutists. IUL can be used intentionally in estate planning when:




The primary goal is death benefit, not banking or policy loans



Funding is reliable and stress-tested



You’re comfortable with moving parts and the absence of whole life guarantees



You’ve pressure-tested outcomes under lower caps and participation rates




For Infinite Banking—where the priority is guaranteed, steadily compounding cash value with simple loan mechanics—whole life wins on clarity, control, and durability.



8) How to review your current policy or a proposal in 20 minutes



Use this mini-checklist:




Purpose: Is this for death benefit, banking, income, or estate planning?



Guarantees: What’s guaranteed vs projected? Look at guaranteed cash value and death benefit.



Early cash value: What percentage of the premium shows as cash value in years 1–3? Does it make sense?



MEC safety: How is MEC testing handled? Is an ART or blend used to control costs?



Commission drag: How is the design minimizing commission and internal charges while meeting your goal?



IUL Allocation: Where is the premium allocated in years 1–3? Fixed vs indexed? Why?



IUL Stress tests: What happens if caps/participation rates fall or a funding year is missed?



Loan modeling: If banking or income is the goal, are loan assumptions conservative and clearly explained?