IUL not structured or funded properly – The single biggest risk people have when it comes to IUL’s is working with a financial advisor or life insurance agent who is not properly trained, educated, or experienced with IUL’s.  Just because they can offer them does not mean they know how to guide you to choose the right IUL or how to structure it properly to meet your needs for retirement purposes. An IUL is one of the most powerful and flexible tools that can be structured to meet various needs.  It is important to work with a professional who understands all the working components and can structure them properly for you to meet your needs. If you were to choose a home remodeling contractor you would do everything you can to choose the right contractor.  Just because they are contractors and have tools doesn’t mean they have the experience to use the tools to meet the needs of your project.  Same philosophy applies to financial professionals.   There is a big difference between an IUL that is structured properly and an IUL that is not. When people say IUL’s are bad it’s because their experience is with someone who did not structure it properly, therefore, it doesn’t perform as expected. Lapse risk – If the IUL is not funded properly you run the risk of the policy lapsing because there is not enough money being allocated to the cash bucket and your premium is only going toward the cost of insurance. If it is not funded properly the policy will lapse leaving you with nothing but a death benefit.