Can You Sell a Columbus Life Indexed Universal Life (IUL) Policy? (2026)

What an IUL Actually Credits

An indexed universal life policy does not invest in the stock market. Premiums net of charges go into the insurer’s general account; the insurer buys options on an index, most commonly the S&P 500, and credits interest to your account value based on index movement subject to three constraints.

The cap is the maximum credited in a segment period. If the cap is 8.5 percent and the index rises 22 percent, you are credited 8.5 percent. The participation rate is the fraction of index movement counted before the cap applies — 100 percent is common, but lower and higher rates exist, and some strategies pair a high participation rate with a spread charged off the top. The floor, usually zero percent, means index declines credit nothing rather than a negative amount.

One detail owners are rarely told at the point of sale: most IUL crediting is based on the index’s price return, which excludes dividends. Over long periods, dividends have contributed a meaningful portion of total equity return, so an uncapped, fully participating price-return strategy would still lag the index most people picture. Our explainer on how indexed universal life works covers the crediting mechanics in detail.

The Zero Percent Floor Is Not Break-Even

This is the most consequential misunderstanding about IUL. A zero percent floor protects the credited interest, not the account value. In a year when the index falls, you are credited zero — and the policy still deducts its monthly charges: the cost of insurance, the per-policy expense charge, any per-thousand charge, and rider costs. The account value goes down.

String two or three flat years together in a period when cost-of-insurance charges are climbing with the insured’s attained age, and the account value can decline materially even though the policy never credited a negative number. The illustration you received at issue almost certainly did not show that sequence, because illustrations project a level rate rather than a realistic pattern of good years and flat ones.

The practical consequence is that an IUL’s health cannot be assessed from the crediting rate alone. It depends on the relationship between credited interest and total charges, and that relationship worsens as the insured ages. See how cost of insurance works and why universal life charges rise.

Why Your Original Illustration Was Optimistic, and the Rule That Changed It

Before 2015 there was no uniform limit on the rate an IUL could be illustrated at, and policies were routinely sold on projections of 7, 8, or more percent compounded indefinitely. The National Association of Insurance Commissioners adopted Actuarial Guideline 49 in 2015 to constrain the maximum illustrated rate. AG 49-A followed in 2020 to address illustration practices around bonuses and multipliers, and AG 49-B took effect on May 1, 2023 with further constraints.

The relevance is direct: if your Columbus Life contract was illustrated before 2015, the projection you were shown was built under rules that no longer exist, and the same policy illustrated today under current constraints will show a materially different picture. That difference is not a change to your contract. It is a change in what carriers are permitted to project.

Do not treat the original illustration as a promise or even as a forecast. It was a demonstration of how the contract behaves under a stated assumption. The only document that tells you where you actually stand is a current in-force illustration.

What the Carrier Can Change While You Own the Policy

Universal life contracts, including indexed designs, contain guaranteed maximums and current values, and the space between them belongs to the insurer. Caps can be lowered on in-force policies. Participation rates can be reduced and spreads increased. Cost-of-insurance rates can be raised up to the guaranteed maximum in the contract, subject to the requirement that changes be applied on a class basis rather than to individuals.

Cost-of-insurance increases have been a recurring source of dispute across the industry over the past decade, with several carriers facing litigation from policyholders over in-force rate increases. Nothing here asserts that Columbus Life has taken such an action; that is a question of fact you should ask the carrier directly and verify rather than assume. Our page on in-force cost increases explains what a class-based increase looks like when it happens.

What to do about it: ask for the guaranteed maximum cost-of-insurance scale alongside the current one. The illustration run at guaranteed charges is the worst case your contract permits, and comparing the two lapse years tells you exactly how much discretion the insurer holds over your policy’s survival.

Feature	What It Does	Can the Carrier Change It?
Cap rate	Limits credited interest in a segment	Yes, down to the contractual guaranteed minimum
Participation rate	Fraction of index movement counted	Yes, subject to contract guarantees
Spread or asset charge	Deducted before crediting	Yes, up to contractual maximums
Floor	Usually zero; prevents negative crediting	Guaranteed in the contract
Cost of insurance	Monthly mortality charge, rises with age	Yes, up to the guaranteed maximum scale
Guaranteed maximum charges	Worst case the contract permits	No; fixed at issue

The Document Request That Answers Everything

One written request to Columbus Life, referencing the policy number, should ask for all of the following: an in-force illustration at current charges and the current crediting assumption; a second at guaranteed maximum charges and the guaranteed minimum crediting rate; a third showing the minimum annual premium required to keep the policy in force to age 100 or contract maturity; the year in which the policy lapses if no further premium is paid; the current account value, surrender value, and surrender charge if any; the total premiums paid and your cost basis; any outstanding loan balance and its interest rate; the current cap, participation rate, and any spread on each indexed account; and the guaranteed maximum cost-of-insurance scale.

Two numbers determine your next move. The lapse year at current assumptions tells you how much time you have. The minimum premium to carry the policy to maturity is what a buyer would model as the cost of ownership, and it is often far lower than what the owner has been paying — funding a contract at the illustrated level rather than the minimum is extremely common.

Read how to interpret an in-force illustration before you send the request, so you can specify the runs precisely. Expect two to four weeks for an older contract.

How a Buyer Values an Indexed Universal Life Contract

The model is straightforward. A buyer acquires the contract, pays the minimum premium necessary to keep it in force until the insured dies, and collects the net death benefit. The price today is the present value of that benefit minus the present value of those premiums, discounted at a required rate of return.

Three implications follow. First, the net death benefit matters, not the face amount — outstanding loans and accrued interest reduce what a buyer receives, dollar for dollar. See what net death benefit means. Second, a contract that is expensive to keep alive is worth less, which is why the optimized premium figure is often the largest variable in an offer. Third, the insured’s age and documented health drive the expected holding period, and a long projected life expectancy compresses the price no matter how large the death benefit is.

Notably, the crediting performance you have been unhappy about is largely irrelevant to a buyer, who is not counting on index credits at all. What matters is the cost of keeping the policy alive. That reframing surprises owners: a poorly performing IUL is not necessarily a poorly valued one. See whether an IUL can be sold.

Loans, Overloans, and the Tax Trap

Many IUL contracts were sold with a distribution strategy built on policy loans. Those loans accrue interest, and if the loan balance grows faster than the account value, the policy can reach a point where the loan approaches the account value and the contract is at risk of terminating.

That is where the real damage occurs. If a policy with a large outstanding loan lapses or is surrendered, the loan balance is generally treated as an amount received. To the extent it exceeds your cost basis, the excess is taxable as ordinary income — and you receive a Form 1099 for money you never got in cash. Owners who borrowed heavily for years can face a substantial tax bill on a policy that produced nothing.

Check the loan balance and the accrual rate on your annual statement, and ask the carrier for the projected year the loan would exhaust the account value. Our pages on loans eroding cash value and modified endowment contracts cover the mechanics. If a contract is heading toward an overloan situation, act before it terminates, not after.

Keep, Restructure, or Sell

Keep it when the coverage is still needed and the minimum premium to maturity is affordable, or when a secondary guarantee is intact. Confirm the guarantee’s status and required premium in writing, since on many designs a late or short payment forfeits it permanently.

Restructure it when the death benefit exceeds what the family needs. Reducing the face amount reduces cost-of-insurance charges and the premium required to sustain the contract. Ask what a reduction does to any guarantee, whether a surrender charge applies, and whether the contract must be retested under the modified endowment rules.

Consider a sale when the death benefit is meaningfully above $100,000, the insured is generally past age 70 with documented health impairments, the coverage is no longer needed, and the contract is past its two-year contestability period and any applicable state waiting period. Ohio, where Columbus Life is domiciled, addresses viatical settlements in Chapter 3916 of the Ohio Revised Code, but the law governing your transaction is that of the state where the policy owner resides.

Do not simply stop paying. Lapsing an IUL with a loan outstanding can produce a taxable event with no cash to pay it, and lapsing without a loan returns nothing at all. If a lapse notice has arrived, treat it as urgent — see what to do about a lapsing policy. For a read on your contract, send the policy cover page for a free review or call (305) 209-7183.

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Frequently Asked Questions

Does a zero percent floor mean I cannot lose money?

No. The floor protects credited interest, not account value. In a flat year the policy credits zero but still deducts cost of insurance, expense charges, and rider costs, so the account value declines. Several flat years in a row while charges rise with age can erode a contract substantially without any negative crediting.

Why does my policy look so different from the illustration I was shown?

Illustrations project a level assumed rate rather than a realistic mix of capped good years and flat ones, and before 2015 there was no uniform limit on the rate that could be illustrated. The NAIC adopted Actuarial Guideline 49 in 2015, AG 49-A in 2020, and AG 49-B effective May 2023 to constrain those projections.

Can the insurer lower my cap after I bought the policy?

Yes, down to the guaranteed minimum stated in the contract, and participation rates and spreads can be adjusted within contractual limits as well. Cost of insurance rates can also be raised up to the guaranteed maximum scale on a class basis. Ask the carrier for the current and guaranteed figures side by side.

What is the single most important document to request?

An in-force illustration, run three ways: at current charges and crediting, at guaranteed maximum charges and minimum crediting, and at the minimum premium required to carry the policy to age 100. Also ask for the year the contract lapses with no further premium. Those figures determine every subsequent decision.

Does poor index performance make my policy worthless to a buyer?

Not necessarily. Buyers do not rely on index credits; they model the minimum premium needed to keep the contract in force until the death benefit is paid. What matters is the net death benefit, the cost of keeping the policy alive, and the insured’s projected life expectancy, not how the crediting has performed.

What happens if my policy lapses with a large loan against it?

The loan balance is generally treated as an amount received, and the portion exceeding your cost basis is taxable as ordinary income even though no cash reaches you. Owners who borrowed heavily can face a substantial tax bill on a policy that paid nothing. Address an overloan situation before the contract terminates.

What size policy is worth reviewing for a sale?

Generally a death benefit meaningfully above $100,000, with an insured past roughly age 70 and documented health impairments that shorten projected life expectancy. Below that threshold the fixed diligence costs of a transaction consume any realistic proceeds, and restructuring or reducing the face amount is the more productive path.

Related Reading

• Can I Sell An Indexed Universal Life Policy
• What Is Indexed Universal Life
• What Is Cost Of Insurance
• What Is An In Force Illustration
• Universal Life Cost Increases
• Policy Loan Eating Cash Value
• What Is A Modified Endowment Contract
• What Is Net Death Benefit
• Policy Lapsing What To Do

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Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.