There are multiple reasons why Whole (WL) is more advantageous than Indexed Universal Life (IUL) when using it with the Infinite Banking Concept (IBC):
- WL has higher guaranteed values
- WL isn't tied to a fluctuating investment
- WL doesn't have increasing cost of insurance that is tied to an investment
- WL Doesn't have surrender charges
- IUL limits liquidty of cash value in the first 1-10 years (depending on the policy)
- Most IUL's limit the amount or total cash value you can access
- WL is less risky for the client
- When using IUL's with IBC the insurance policy is RISKY. Because the increasing costs of insurance is present within the policy, the cash value is needed to stay within the Index to off-set the increase. If the cash value is removed (as described in IBC), you have a higher risk of increased premium in the future and policy lapse.
So in essence you are taking an already unproven product (IUL), and adding increased risk to the client and the future viability of the policy.
One of the challenges faced when discussing IBC is rate chasing. If you find yourself rate of return chasing, you don't understand what IBC is about.