When you fund an IUL, some costs cover the risk of you passing away, known as mortality costs, based on age and risk factors. For example, if you’re 60, about 30 out of 1,000 people in your age group might pass within a year, and the insurance company must prepare for that risk.
If you contribute $100,000, upfront costs like mortality charges, setup expenses, and agent compensation could total $30,000–$35,000. Early on, your accumulation value might be $90,000 or more, but if you cancel, your surrender value could be lower (e.g., $70,000), as the company recoups those initial expenses.
For long-term goals, the accumulation value typically grows significantly over time, making these costs negligible in the big picture.
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