When NASCAR star Kyle Busch filed a lawsuit regarding his IUL policies with Pacific Life Insurance Company, many in the financial-planning world stood up and took notice. At first glance, this might feel like another “IUL gone wrong” story, but the full picture shows both caution and opportunity. At Unique Growth, we believe you can still use an index universal life (IUL) policy as a strategic tool for tax-advantaged growth, protected cash value, and legacy planning if you build it right. Let’s walk through what happened, why the vehicle still has merit, and most importantly what to ask and watch to make it work for you.

What happened in the Kyle Busch case

In the video by David McKnight titled “What REALLY Happened with the $8 Million Kyle Busch… IUL Lawsuit”, McKnight breaks down how Busch and his wife ended up alleging they lost more than $8.5million because of the design, sale and administration of multiple indexed universal life insurance (IUL) policies. 

Key points of the case include:

• The Busches paid roughly $10.4 million in premiums for the IUL policies. 
• Their claim is that they were provided unrealistic projections, omitted material facts, and ultimately the policies did not     perform as illustrated. 
• They allege misleading sales tactics and unsustainable assumptions around caps/rates, participation, and cost-of-insurance     increases.
• The case is being presented as a cautionary tale of “IUL retirement schemes” gone awry. 

What we see here is not necessarily a condemnation of all IULs, but a strong reminder of why so many IULs fail to meet the hope and promise pitched to clients.

Why IULs are still a powerful vehicle when done right

Despite what the headlines may suggest, an IUL is not inherently bad, in fact, for many clients (especially high net-worth individuals, business owners, and those seeking tax-efficient retirement income), it can be an excellent fit.

Protected upside, defined downside

With a well-designed IUL you can:

• Participate in upside from an equity index (or indices) without direct exposure to market losses (i.e., many contracts     offer a floor of 0 % on credited interest).
• Accumulate cash value on a tax-deferred basis and access it via loans/withdrawals in a tax-efficient manner (with appropriate structuring).
• Use life insurance death benefit for legacy planning, business protection, estate planning or creditor protection (depending on state).

Tax-efficiency and retirement income flexibility

Because the cash value growth inside the policy is tax-deferred, and if structured properly the policy loans/withdrawals can be tax-free, an IUL can function as a tax-advantaged retirement income vehicle. Many of our Unique Growth clients in their 50s–60s who have idle 401k/IRA assets see this as a compelling complement to traditional retirement accounts.

Protection of principal and market storm buffer

One of the most attractive features for risk-aware clients: In a market downturn, the IUL crediting formula often ensures you don’t lose the preceding gains or principal in the cash value(depending on the contract style). That provides peace of mind especially for those nearing retirement.

Customization & control

A properly funded IUL can be max funded (within IRS limits), structured to avoid large cost of insurance (COI)spikes, and paired with high-quality carriers. That level of custom strategy aligns with how Unique Growth coaches clients to design personalized financial roadmaps.

What went wrong in the Kyle Busch case, and how to avoid the same pitfalls

If you ask: “Why then did Busch’s IUL fail?” the answer lies in assumptions + execution + oversight. Here are the common problems and how we recommend you avoid them.

Unrealistic illustrations and aggressive assumptions

Many IUL sales use illustrations projecting high long-term index crediting rates, participation rates, and very low cost of insurance escalations. In Busch’s case, McKnight points out the assumptions were overly optimistic and did not sufficiently account for future carrier changes in cap/participation or COI increases. 

How to avoid it:

• Ask for both projected and guaranteed illustrations.
• Review the assumptions: What cap/participation rates are used? Are they realistic?
• Have your advisor stress-test the policy under pessimistic scenarios (weak index years, COI hikes, lower participation).
• At Unique Growth, we walk clients through multiple scenarios, so they see the downside as well as the potential.

Cost of insurance (COI) increases and inefficient premium funding

As you age, the cost of providing the death benefit rises, and if the policy is under-funded, the cash value can erode, forcing large additional premiums or policy lapse. The Busch case appears to illustrate that the policy design did not sufficiently account for future COI increases and lacked built-in margin for funding stress.

How to avoid it:

• Choose a carrier with strong persistence and long-term stability.
• Plan premium funding to exceed the minimum amounts needed (i.e., “over-funding” within legal limits) so the cash value builds robustly.
• Monitor in-force illustrations periodically (every 3-5 years) and adjust if necessary.

Changes in cap/participation rates and credits

Even the best IULs are subject to crediting formulas with floors, participation, caps, and spread/fees. If a carrier lowers the cap or participation rate, your credited interest may diminish. The Busch case suggests that those changes were not fully disclosed or accounted for.

How to avoid it:

• Review the contract’s index crediting provisions: Are they locked or subject to change? How often?
• Work with an advisor who uses carriers with transparent track records and conservative assumptions.
• Incorporate policy flexibility and ensure you understand how index performance translates into credited interest.

Lack of ongoing review and proactive management

A life-insurance policy is not “set and forget.” Over decades, policy terms, carrier crediting, health status, and tax laws can change. The Busch case underscores what happens when there’s insufficient monitoring.

How to avoid it:

• Schedule annual or semi-annual reviews of your IUL policy.
• Run updated in-force illustrations under both “expected” and “worst-case” scenarios.
• Be ready to adjust strategy: possibly shift premiums, reduce death benefit, or even exchange/rollover if needed.
• At Unique Growth, we assist clients with ongoing coaching and “check-ups” on their financial roadmap, including their IUL when used.

Key questions you should ask before adding an IUL to your roadmap

Before a client commits to an IUL as part of their retirement plan, here are the essential questions:

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1. What index options are used for crediting? Understand the indices, participation rates, caps, and floors.
2. What is the guaranteed vs illustrated assumptions? Make sure you get both.
3. How much premium needs to be funded, and what happens if you stop adding new premiums?
4. What carrier are we using, and what is their track record for persistency, crediting, and policy performance?
5. What happens in the scenario of weak index years or carrier crediting reductions?
6. What is the cost of insurance today, and how is it projected to escalate?
7. What exit strategy or alternative do you have if future terms change or the policy becomes inefficient?
8. How does this IUL interact with the rest of your retirement plan (401k/IRA, taxable accounts, real estate, legacy goals)?

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How Unique Growth helps you build a custom roadmap with IUL as a strategic piece

At Unique Growth, we don’t believe in one-size-fits-all solutions. Here’s how we integrate an IUL into a broader financial plan:

• We help you meet where you are: we assess your current portfolio, your idle 401k/IRA assets, your risk tolerance and your legacy goals.
• We evaluate whether an IUL makes sense for you, not as a replacement for good retirement accounts, but as a complement: providing tax-advantaged growth, protected principal, and flexibility.
• If we decide an IUL is appropriate, we assist with carrier selection, policy design (over-funding within IRS guidelines), premium planning, and stress-testing illustrations.
• We implement ongoing coaching and review: you’ll get periodic check-ups, updated in-force illustrations, scenario modelling, and recommendations if adjustments are needed.
• We align the IUL with your bigger picture: retirement income goals, tax-planning, legacy/estate strategy, business succession, and employee financial wellness (if relevant).

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Final thoughts: Use the lessons from Kyle Busch’s case to your advantage

The Kyle Busch case should serve as a wake-up call, not a deterrent. It reminds us that even promising financial vehicles like IULs can fail to deliver if the design, assumptions, carrier, funding or ongoing review aren’t done correctly. But it also reminds us: the door is still open for those who build with care.

If you are in your 50s or early 60s, have household income of $80k+, are concerned about old 401k/IRAs lying idle, and want a strategy that offers tax-advantaged growth and downside protection, an appropriately structured IUL may be one of the tools in your toolbox.

At Unique Growth, we’re ready to help you navigate the complexity, ask the right questions, and build a roadmap that puts you in control.

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Watch David McKnight's full Youtube video on the case HERE.