IUL basics

How Much Does IUL Insurance Cost? Fees and Charges to Know

How much does an IUL cost? It depends on the policy. You pay a premium, and charges such as cost of insurance come out of the cash value and can rise.

Reviewed by Brian Carrozzi

Founder, RestAssured · Licensed life insurance agent

Updated October 28, 2026 · How we write and review

Short answer: How much an IUL costs depends on the policy, the company and you: the Texas Department of Insurance (TDI) says “Rates vary by company.” An indexed universal life (IUL) policy’s cost includes the premium you pay plus charges deducted from the cash value, such as the cost of insurance and expense charges, and surrender charges can apply if you cancel early. Regulators say some of those charges rise with age and the insurer can increase them, so ask to see every charge and how high each one can go.

This page doesn’t quote prices. If you’re new to these policies, start with what IUL insurance is and how it works.

How much does an IUL cost?

There’s no one number. TDI says “Rates vary by company” and “Don’t choose a policy on price alone.”

What you pay in premium is partly up to you, within limits. FINRA says universal life “offers flexible premium payments and insurance coverage,” and FINRA says indexed universal life “falls under the universal life insurance umbrella.” The NAIC’s Life Insurance Buyer’s Guide says that with universal life, “you can choose a flexible premium payment pattern as long as you pay enough to keep your policy in force.” The Maryland Insurance Administration says “There is a minimum required premium at issue.”

FINRA also says insurance products “can be complex and come with fees, so it pays to do your homework before you buy.”

Where does your IUL premium go?

The New York State Department of Financial Services (DFS) describes how universal life works:

Premiums go in. “The company credits your premiums to the cash value account.”
Charges come out. “Periodically the company deducts from the cash value account its expenses and the cost of insurance protection, usually described as the mortality deduction charge.”
Interest is credited. “The balance of the cash value account accumulates at the interest credited.” For an IUL, FINRA says the policy “follows a set stock index (such as the S&P 500).”

What fees and charges does an IUL have?

Maryland says “All expense charges, such as cost of insurance charges and surrender charges, are stated in your contract.” Most of the descriptions below are for universal life, the category FINRA places IUL in; where a regulator is describing permanent life insurance in general, we say so.

Charge	What regulators say	What to ask
Cost of insurance (mortality charge)	Wisconsin OCI: “The cost of insurance charge is the amount you must pay the insurance company to fund the policy’s death benefit.” It calls it “The main expense of a universal life policy.”	How is it calculated, and what is the guaranteed maximum?
Expense charges	DFS: the company deducts “its expenses” from the cash value. DFS: “Some universal life policies also specify a maximum basis for the expense charge.”	What expense charges apply, and is there a maximum?
Charges on each premium	Maryland: “Part of your premium pays for the expense charges”… DFS: a front-end type policy “will deduct a percentage of the premium paid.”	Is anything deducted from each premium before it reaches the cash value?
Surrender charges	DFS: if you surrender, “you may receive less than the cash value account because of surrender charges.”	What is the surrender charge schedule, year by year?
Riders	TDI: “You can usually add features or other coverages to your policy so it better suits your needs. You do this by buying policy riders.”	Which riders are included, which are optional, and what does each one cost?
Policy loans	Maryland, on permanent life insurance: “any loans (including interest) taken out against the policy that you have not repaid will be subtracted from the death benefit.”	What is the loan interest rate, and is it fixed or variable?

Can IUL charges go up?

They can, up to the maximums stated in the policy.

The cost of insurance rises with age. Wisconsin OCI says “As you age, the rate of the cost of insurance charge will increase.” DFS says “You should remember that the mortality charges increase, as you become older.”
The insurer can raise charges. DFS says that with universal life, “you will need to actively manage the policy to maintain sufficient funding, especially because the insurance company can increase mortality and expense charges.” Wisconsin OCI says the company “can increase the rate for the cost of insurance charge due to certain events such as increase in expenses.”
There are guaranteed maximums. DFS says “The company guarantees a minimum interest rate and a maximum mortality charge.” Wisconsin OCI says “Insurers can never increase rates above the guaranteed maximum rates provided in the policy.”

How do IUL surrender charges work?

DFS says surrender charges “can be of two types. A front-end type policy will deduct a percentage of the premium paid, while a back-end type policy will deduct a more substantial charge but only if the policy is surrendered before a specified period”… It adds that with a back-end type, “the charge decreases with each year you continue the policy.”

Writing about permanent life insurance, TDI says “You might have to pay a surrender fee if you withdraw the money early.” Ask the agent what you would get back if you canceled in each year a surrender charge applies.

What happens if the cash value can’t cover the charges?

The policy can lapse. TDI says “If your premiums are lower than the cost of insurance, the difference is taken from the cash value,” and “If the cash value reaches zero, your policy could lapse.” Maryland says “If your planned premium isn’t enough to cover monthly deductions, additional premiums will be required to keep your policy in force.”

The NAIC Buyer’s Guide suggests you “Ask what might be the highest premium you’d have to pay to keep your coverage.”

For more on how these policies are funded, see what universal life insurance is.

How can you see IUL costs in the illustration?

The National Association of Insurance Commissioners (NAIC) says a basic illustration “shows both guaranteed and non-guaranteed elements of the policy.” It says guaranteed elements include “policy benefits, premiums, values, credits, and charges that are guaranteed and determined at issue,” and each “has a non-guaranteed counterpart in the basic illustration that is not guaranteed or determined at issue.”

When you read one:

Compare the guaranteed and non-guaranteed columns. Ask which charges each set of columns assumes, and how far apart they are.
Find the year the policy would lapse on guaranteed values. Ask the agent to point to it.
Don’t treat projections as promises. TDI says charts “are usually projections and aren’t a promise of a policy’s performance.” For index-linked policies, the NAIC says Actuarial Guideline 49-A applies to policies “Sold on or after December 14, 2020.”

After you buy, TDI says “The company will send you a report each year showing your cash value and how long the policy might last.”

Questions to ask about IUL costs

Bring this checklist to any conversation with a licensed agent:

What is the full list of charges in this policy, and where is each one stated in the contract?
How is the cost of insurance calculated, how does it change as I age, and what is the guaranteed maximum?
Are there expense charges or charges taken from each premium? Is there a maximum?
What is the surrender charge schedule, and what would I get back if I canceled in each year?
What do the optional riders cost, and what is the policy loan interest rate?
On guaranteed values, how long does the policy last if I pay only the planned premium?
How long is the review period? The NAIC Buyer’s Guide says if you’re not satisfied, “you can return it for a full refund within a certain period,” and TDI says “Texas policies have a free-look period of at least 10 to 20 days.”

For a wider look at trade-offs, see IUL insurance pros and cons.

The bottom line

How much an IUL costs depends on the company, the policy and how you fund it. Beyond the premium, regulators describe a cost of insurance charge, expense charges and surrender charges, and DFS says the insurer “can increase mortality and expense charges.” FINRA says IUL “is generally not considered a security,” so compare the guaranteed columns of the illustration and the full list of charges before you decide.

A licensed agent can go over options and every charge with you. The licensed agents who work with us offer IUL policies: call (888) 603-7464 to compare options and get a quote, with no obligation. Here’s how calling RestAssured works.

RestAssured is not an insurance company or an insurance agency; we connect callers with independently licensed insurance agents. RestAssured doesn’t give tax or investment advice.

Frequently asked questions

How much does an IUL cost per month?

This guide doesn’t quote prices. The Texas Department of Insurance says rates vary by company, and the NAIC Buyer’s Guide says that with universal life you can choose a flexible premium payment pattern as long as you pay enough to keep your policy in force. Ask a licensed agent for a quote based on your age, health and state.

What fees does an IUL have?

Regulators describe a cost of insurance (mortality) charge, expense charges and surrender charges for universal life, and Maryland’s insurance regulator says all expense charges, such as cost of insurance charges and surrender charges, are stated in your contract. Ask the agent for the full list of charges, including any for riders and policy loans.

What is the cost of insurance in an IUL?

Wisconsin’s insurance regulator says the cost of insurance charge is the amount you must pay the insurance company to fund the policy’s death benefit, and that the rate increases as you age. NY DFS says the company periodically deducts its expenses and the cost of insurance protection from the cash value account.

Can IUL fees go up?

They can. NY DFS says the insurance company can increase mortality and expense charges on universal life, and Wisconsin’s regulator says insurers can never increase rates above the guaranteed maximum rates provided in the policy.

What are IUL surrender charges?

NY DFS says that if you surrender a universal life policy, you may receive less than the cash value account because of surrender charges, and that a back-end type charge decreases with each year you continue the policy. Ask for the surrender charge schedule before you buy.

Sources

This article is for general education. Policy features, prices and eligibility vary by insurance company and state; your agent will explain the specific terms of any policy before you apply.