Worked example: a surgeon, a disability gap, and an IUL pitch

Illustrative scenario. This is a hypothetical example constructed to demonstrate our analytical process. It does not describe an actual client engagement. All figures are illustrative, not quotes or projections. Nothing here is a recommendation for any individual — that requires the analysis itself.

The situation

Dr. R. (hypothetical) is a 45-year-old orthopedic surgeon employed by a hospital system. Income of approximately $650,000 — a $500,000 base plus production bonus. Married, two children ages 10 and 13, a $900,000 mortgage, qualified retirement plans maxed each year, backdoor Roth contributions in place, and roughly $1.5 million across retirement and taxable accounts. Household spending runs about $22,000 a month after tax, leaving roughly $130,000 a year of investable surplus.

Existing coverage: employer-paid group long-term disability (60% of base salary, capped at $15,000/month), $1.2 million of group term life through the hospital, and a personally owned $1 million 20-year term policy purchased at 35, with ten years remaining.

Dr. R. came to us with a specific question. Another agent had proposed a maximum-funded indexed universal life policy at $100,000 a year, presented as a "tax-free retirement plan." He wanted to know whether it was a good idea.

The honest answer required reordering the question.

Finding one: the largest unpriced risk wasn't the IUL question. It was disability.

The group LTD looks substantial until you do the arithmetic. It covers base salary only: 60% of $41,667/month is $25,000 — but the plan caps at $15,000. Because the employer pays the premium, the benefit is taxable; at an illustrative 35% effective rate, that's roughly $9,750 a month net. Against $22,000 a month of household spending, the "60% plan" actually replaces about 44% of what the family spends.

Group LTD, net of cap and tax Individual own-occupation DI (added)

Illustrative figures. Group benefit shown net of the $15,000/month plan cap and an assumed 35% effective tax rate. Individual DI benefits, paid with after-tax dollars, are received tax-free.

The definition of disability matters as much as the number. Group plans commonly shift from "own occupation" to "any occupation" after 24 months. For a surgeon, that distinction is the whole game: a hand injury can end a surgical career while leaving someone fully capable of an occupation — and therefore, under the group definition, not disabled.

The design An individual disability policy with a true own-occupation definition, sized toward carrier issue limits — illustratively $10,000–$15,000/month of supplemental benefit — paid personally with after-tax dollars so the benefit, if ever needed, is tax-free. Unlike the group coverage, it survives a job change. This came first because it protects the engine that funds everything else, including any accumulation strategy.

Finding two: a real life insurance gap, and term — not permanent — to fill it.

A capital-needs analysis for this fact pattern: survivor income support of roughly $225,000 a year (about $4.5 million of capital at an illustrative 5% draw), $900,000 of mortgage retirement, $600,000 of education funding, and $200,000 of liquidity reserve — approximately $6.2 million of total need. Against that: $1.5 million of investable assets and $1 million of reliable personally owned coverage.

We excluded the $1.2 million of group life from the foundation. It disappears with the job, and a 45-year-old surgeon has a meaningful chance of changing employers — or developing a health condition that makes new coverage expensive — before the need expires.

Illustrative figures. Group life of $1.2M excluded as non-portable. Income support assumes an illustrative 5% capital draw.

The design Approximately $4 million of new level term coverage, laddered — illustratively $2.5 million for 20 years and $1.5 million for 15 — so coverage steps down as the mortgage amortizes and the children launch.

Worth stating plainly: the need here is large but temporary. A commission-driven process often lands this case on permanent coverage. The analysis says term.

Finding three: the IUL pitch — right category, wrong size, wrong sequence.

The proposal wasn't foolish. Dr. R. fits the actual IUL candidate profile: top tax bracket, qualified space already maxed, a 20-year horizon, and stable surplus. The category was defensible. The specifics were not.

Our review of the illustration examined four things, and stress-tested each:

What we tested	Why it matters
Re-ran the design at reduced crediting assumptions	The illustration used the maximum rate permitted. The strategy has to survive ordinary outcomes, not just the best printable one.
Mapped policy charges as a share of premium, years 1–10	Charges are concentrated early. The client should see exactly what the first decade costs before committing to it.
Modeled a “funding stops in year 6” scenario	Max-funded designs assume a decade of discipline. If life interrupts, an underfunded policy can drift toward lapse.
Compared against taxable investing, after tax	The honest benchmark. The decision turns on tax assumptions, liquidity preference, and funding discipline — we show which assumptions flip the answer.

The result of that work was a smaller, later, conditional version of the original idea — and a clear picture of where the family's surplus actually goes under each path:

Disability (own-occ) Term ladder IUL Liquid taxable investing

Illustrative figures based on roughly $130,000 of annual investable surplus. Premiums vary with underwriting and product selection.

The conditional recommendation If pursued at all, cap the IUL at roughly $40,000 a year — about a third of investable surplus — and only after the disability and term coverage are placed. The remaining surplus goes to taxable investing, preserving liquidity and flexibility. An equally defensible answer is to skip the IUL entirely and invest it all; the decision turns on tax assumptions, funding discipline, and liquidity preference. We model both paths and show the client exactly which assumptions flip the answer.

That is the difference between a pitch and an analysis. A pitch has one number. An analysis tells you what has to be true for each number to win. And to be fair to the pitch: the $100,000 design would build more cash value by year 20 — but in the analysis, that accumulation job is carried by the $77,000 of liquid taxable investing, which the family can reach in year three without surrender charges.

The original pitch

One product: max-funded IUL at $100,000/yr

Annual outlay	$100,000
New death benefit	≈ $1.7M
Disability income, net	$9,750/mo — 44% of spending
Liquid surplus kept	$30,000/yr
If funding stops early	lapse risk

The analysis3 policies

Own-occ DI + $4M term ladder + capped IUL

Annual outlay	≈ $53,000
New death benefit	$4,000,000
Disability income, net	≈ $22,250/mo — ≈100% of spending
Liquid surplus kept	$77,000/yr
If funding stops early	protection stays in force

What we deliberately deferred

Long-term care. At 45, with this asset trajectory, the efficient window for that decision is roughly ages 50–55, when hybrid designs can be evaluated against the asset picture that actually exists then. It went into the plan as a scheduled revisit, not a product.

What the client receives

Every engagement produces a written analysis memo: the assumptions, the arithmetic above, carrier-agnostic design specifications, and — explicitly — what we recommended against and why. Carrier selection happens afterward, compared on the merits. The memo is the deliverable; the policies are its implementation.

Why we publish worked examples instead of testimonials

You can't evaluate an advisor by adjectives. You can evaluate one by reasoning. This page shows the reasoning — the same process, applied to your facts, is what an engagement looks like.

This scenario is hypothetical and for educational purposes only. All figures, rates, and premiums are illustrative and will differ based on individual circumstances, underwriting, and product availability. Insurance products are subject to underwriting approval. Tax discussion is general in nature; coordinate decisions with your CPA and attorney. LogicPoint Advisors does not provide investment, tax, or legal advice. Cosmin Mandachescu · FL 2-15 License #G335891.

Have a situation with this shape — or a pitch you want a second opinion on?

A first conversation is exploratory and at no cost. We will walk through your facts the same way this page walks through Dr. R.'s.

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A surgeon, a disability gap, and an IUL pitch