Does the Cost of Insurance Increase in an Indexed Universal Life (IUL) Policy?

Shawn Plummer

CEO, The Annuity Expert

Understanding the Cost of Insurance in IUL Policies

Indexed Universal Life (IUL) insurance policies have a unique structure where the premium remains constant, but the internal cost of insurance can increase with age.

Here’s how it works:

  • Constant Premium: The premium you pay for an IUL policy is fixed and does not change throughout the life of the policy.
  • Increasing Cost of Insurance: Despite a constant premium, the actual cost of insurance within the policy tends to increase as you age. This is because the risk of death increases with age, and insurance companies adjust the costs accordingly.

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Impact on Policy Value

  • Early Years: In the early years of the policy, the cost of insurance is relatively low. A larger portion of your premium goes towards the cash value component.
  • Later Years: As you age, the cost of insurance rises. This means a larger portion of your premium is used for insurance costs, and less goes towards building cash value.

IUL Policy Costs Over Time

Age RangeCost of InsuranceImpact on Cash Value
30-40LowHigher cash value growth
41-50ModerateBalanced growth and insurance cost
51-60HighLower cash value growth
60+Very HighMinimal cash value growth


In summary, while the premium of an IUL policy remains level, the internal cost of insurance increases with age, affecting the policy’s cash value accumulation. Understanding this dynamic is crucial for policyholders to manage expectations and plan for their financial future. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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