As most everyone in the life insurance industry knows, Indexed Universal Life is the fastest growing life insurance product of recent years, and the pace even appears to be picking up.

Not surprisingly, a parade of insurance company wholesalers and company execs stream through our office urging us to get on board. They tout the product as one with unlimited upside potential and guaranteed downside protection. They tell the powerful story of cash value growth tied to an external index and a minimum crediting rate of 0% or 1%. Their message has a compelling ring to it.

The opportunity to catch a high rate of return based on an independent index with a minimum guaranteed floor providing downside protection is clearly attractive. They tell us something to the effect of, “Your clients can’t lose.”

Notwithstanding that contention, our discussions with both the product manufacturers and the product sellers suggest that there’s more to the IUL story. For example, a significant number of sales are tied to complex economic factors, oversimplifications or, frankly, total misperceptions. Too many IUL sales revolve around premises like this:

— Free money. Borrow money at 4% and get 11% from a IUL.

— Guaranteed. How can you lose if the cash value can never earn less than 0%?

— Index history. Over 5, 10, 20 or 30 years the index has increased more than 90% of the time.

— Policy distributions make money. Borrow cash value at 6% and earn 11% on borrowed funds.

— The best buy is the product with the lowest premium and highest illustrated rate.

Because of this, here’s the frankly bedeviling question we are struggling with: “Will buyers’ expectations come close?”

Once the hype subsides, it’s clear that policyholders can lose their money (all of it, in fact) in spite of the “guaranteed downside protection.” Does the client know (comprehend is more to the point) that the insurance company has the discretion to limit cash value earnings when the index increases?

Is a retrospective look over the past 20 or 30 years a gauge of the economic reality of the 21st century? Is showing an intermediate rate of 8% sufficient on a product where 11% can be illustrated?

It’s easy to understand why IULs are so popular. Times are tough for the life insurance business. Interest rates have been down for a long time and it doesn’t appear that’s going to change in the near term or maybe for quite a while. On top of that, regulations are increasing and mainstream guaranteed death-benefit products are getting pricier or fast disappearing. In such an environment, product evolution and creativity are essential.

Then, IUL comes along and breathes new life into life insurance sales.

Every day, we work hard to create multiple winners. This means putting product manufacturers, product sellers and buyers in the best position to achieve their goals and objectives.

Is the IUL buyer a winner? I’m struggling with this one.

(Best’s Review contributor M. David Greenberg is president and chief executive officer of Brokers’ Service Marketing Group in Wellesley, Mass. He can be reached at davidg@bsmg.net)