Yes, universal life is the most commonly traded contract type in the secondary market – but only in a specific profile, and the more urgent question for most Columbus Life policyholders is whether the policy is quietly heading for lapse. Columbus Life sells universal life through independent agencies under the Explorer Plus name, alongside indexed designs and a permanent portfolio that includes whole life and survivorship life. It also services a much older block, some of it written when the company was Columbus Mutual Life Insurance Company, and that older block is where the trouble usually is.
Here is the pattern to check for. Universal life sold in the 1980s and early 1990s was illustrated at credited interest rates in the double digits, because that is what general account portfolios were earning at the time. Those rates fell for three decades and many contracts have been crediting at or near their guaranteed minimum for years. Meanwhile the cost of insurance charge rises every year with the insured’s attained age. A policy funded at the premium the illustration suggested in 1987 can be structurally insolvent in 2026 while the annual statement still shows a positive balance. Finding out where yours actually stands takes one written request, and it should happen before any decision about selling.
In This Article
- Identify the contract and the block it came from
- The illustrated-rate problem, in numbers
- Why the monthly charge accelerates
- No-lapse guarantees, and why timing beats totals
- Columbus Life, the regulator, and the documents to request
- The five options, ranked by how often they are right
- Frequently Asked Questions
Identify the contract and the block it came from
Read the schedule page for three items: the issuing company, the plan description, and the policy date.
A universal life contract is described as flexible premium adjustable life insurance. It has a specified amount of insurance, an account value, and monthly deductions. The premium printed on the schedule is a planned premium, not a required one – which is precisely why these policies fail quietly. Paying the planned premium does not guarantee anything.
If the issuer reads Columbus Mutual Life Insurance Company, the policy was issued before 1989. Columbus Mutual was incorporated in Columbus, Ohio on November 17, 1906 and grew to roughly $4 billion of life insurance in force by 1980. Western & Southern Financial Group acquired it in 1982 and created Columbus Life Insurance Company in 1989, moving the home office to Cincinnati. The obligations followed the reorganization, and Columbus Life services those contracts today. A policy dated in the 1980s under either name sits squarely in the high-illustrated-rate era.
If it reads Columbus Life and the plan is described as Explorer Plus or a similar current designation, you are in a more recent block, priced under more conservative assumptions – but the same structural mechanics apply. See how universal life works.
The illustrated-rate problem, in numbers
A universal life contract credits interest on the account value at a rate the insurer declares, subject to a guaranteed minimum stated in the contract – commonly 4% to 4.5% on policies from that era, and lower on more recent ones.
Consider a policy illustrated in 1988 at an 11% credited rate. The illustration showed the account value compounding fast enough to absorb rising insurance charges for decades, so the premium recommended was modest. Actual credited rates drifted down through the 1990s and 2000s and eventually settled at or near the guaranteed floor. Every year of that gap compounded against the policyholder, and because a shortfall is invisible in year three and decisive in year twenty-eight, nobody intervened.
The result is a large in-force population of older universal life contracts that will lapse in the insured’s eighties unless substantially more premium goes in. That is not a scandal and it is not necessarily anyone’s fault – it is what happens when a long-dated projection is built on a short-lived interest rate environment.
What it means for you is that the illustration in your file is not evidence about 2026. Only a current in-force illustration is. Request one on the guaranteed basis – maximum contractual charges and the minimum credited rate – and ask for the year the contract lapses under those assumptions. Reading an in-force illustration explains what each column represents.
Why the monthly charge accelerates
The ledger runs the same way every month: account value, plus premium received, plus interest credited, minus the cost of insurance charge, minus expense and per-thousand charges, minus rider charges.
The cost of insurance charge is assessed on the net amount at risk – the specified amount minus the account value – at a rate per thousand that rises with the insured’s attained age. Both terms move against you simultaneously. Take a $400,000 policy with a $140,000 account value: $260,000 at risk, and at $16 per thousand annually the charge is about $4,160. Ten years later the rate might be $52 per thousand and the account value might have slipped to $70,000, leaving $330,000 at risk and a charge near $17,160. The premium that supported the first figure cannot support the second.
That is why the failure arrives suddenly from the policyholder’s point of view. The decline is gradual until the account value approaches zero, at which point the grace notice appears with a demand for a catch-up payment. If one has already arrived, act inside the grace period rather than after it – options that exist before lapse disappear afterward. What to do when a policy is lapsing covers the sequence, and cost of insurance covers the charge itself.
| Request | What it tells you | Why it is easy to miss |
|---|---|---|
| In-force illustration, guaranteed basis | The year the policy lapses in the worst legal case | Carriers often send only the current-basis run |
| Solve premium to age 100 | What it actually costs to keep the coverage | Never appears on an annual statement |
| Declared rate vs. guaranteed minimum | How much room is left before crediting hits the floor | Statements show the credit, not the floor |
| Cash surrender value vs. account value | What you would really receive on surrender | Surrender charges can run 10 to 15 years |
| No-lapse guarantee status | Whether the death benefit is protected and until when | The shadow account is never shown to you |
No-lapse guarantees, and why timing beats totals
Some universal life contracts carry a no-lapse guarantee that keeps the death benefit in force even if the account value reaches zero, provided a premium test is satisfied. The test is usually tracked in a separate calculation – a shadow account or cumulative premium test – that exists only for that purpose. It is not your cash value, you cannot borrow against it, and it is never paid to you.
The critical property is that the test is sensitive to when premiums arrived, not just how much was paid in total. Premiums credit to the shadow account from the date received, so a payment made four months late leaves the account permanently behind where an on-time payment would have left it. Some contracts allow a catch-up, sometimes only within a limited window; others do not.
So ask three precise questions in writing: is the no-lapse guarantee currently intact, through what age does it run, and if it is impaired, what exact dollar amount paid by what exact date would restore it? Vague reassurance is not an answer here. What a no-lapse guarantee is explains the structure.
Columbus Life, the regulator, and the documents to request
Columbus Life Insurance Company is a member of the Western & Southern Financial Group, headquartered in Cincinnati, Ohio, and Ohio-domiciled – so the Ohio Department of Insurance approved the policy forms and is the primary regulator. Ohio separately governs third-party purchases of in-force policies under Chapter 3916 of the Revised Code, addressing provider and broker licensing, required disclosures, and a rescission period after funding. The owner’s state of residence controls the owner’s side of any transaction.
Request in writing, referencing the policy number: an in-force illustration on the current basis; an in-force illustration on the guaranteed basis with the projected lapse year; the level premium solved to carry coverage to age 100; the account value and the cash surrender value as separate figures; the current declared credited rate and the contractual guaranteed minimum; the no-lapse guarantee status if one exists; any outstanding loan balance; and a written list of riders.
The account value and surrender value distinction matters. Surrender charges on universal life contracts commonly run ten to fifteen years from issue, and any decision made from the account value alone will overstate what you would actually receive.
The five options, ranked by how often they are right
Fund it properly. If someone still needs the death benefit and the guaranteed-basis solve premium is affordable, paying it is the strongest outcome. It is the option nobody proposes because it costs more than the status quo.
Reduce the specified amount. A smaller death benefit shrinks the net amount at risk and the monthly charge directly. This rescues more contracts than any other single move, and it is rarely suggested. Ask for the solve premium at two or three reduced face amounts.
Restore the guarantee. If a no-lapse guarantee is impaired and a catch-up is available, the specified payment is often far cheaper than every alternative. Get the figure and the deadline.
Surrender or exchange. Taking the cash surrender value ends the coverage. A section 1035 exchange moves the value into another contract without triggering current tax on the gain, which can make sense when a newer design is genuinely better, but it also restarts surrender charges and a new contestability period. An exchange compared with a settlement and surrender compared with a sale set out the trade-offs.
Sell. Worth investigating when the net death benefit is roughly $100,000 at minimum with real bidding above $250,000, the insured is around 70 or older or younger with material impairment, and the realistic alternative is surrender or lapse. An underfunded universal life contract on an impaired insured is the single most common profile that produces an offer well above cash surrender value. It is also the profile that disappears if the policy lapses first, which is why the in-force illustration comes before anything else. If your file is small, the small-policy guidance explains the floor; if the contract is actually whole life, see the whole life page.
Pine Lake Life Solutions provides education and a free policy review. We do not purchase policies and are not licensed in every state. Send the policy cover page and the most recent annual statement, or call (305) 209-7183.
Frequently Asked Questions
Why is my 1980s universal life policy running out of money?
It was illustrated at credited interest rates in the double digits, which reflected the investment environment at the time. Actual credited rates fell for three decades toward the contract’s guaranteed minimum while the cost of insurance charge rose every year with the insured’s age. The gap compounded silently until the account value could no longer absorb the deductions.
My policy says Columbus Mutual. Who services it now?
Columbus Life Insurance Company in Cincinnati. Western and Southern Financial Group acquired Columbus Mutual Life Insurance Company in 1982 and created Columbus Life in 1989, relocating the home office. Obligations under pre-1989 contracts followed the reorganization. Request a status letter using the original policy number and the insured’s full name and date of birth.
Is the planned premium on my schedule page enough?
Not necessarily, and that is the central hazard of a flexible-premium contract. The planned premium is a billing convenience, not a funding requirement or a guarantee. The number that matters is the level premium solved to carry coverage to age one hundred on a guaranteed basis, which you have to request specifically.
What is a shadow account?
A separate calculation the insurer maintains solely to test whether a no-lapse guarantee remains in force. It is not cash value, cannot be borrowed, and is never paid to you. Because it credits premiums from the date received, a late payment can impair the guarantee permanently even after you resume paying the full amount.
Would a 1035 exchange be better than selling?
Sometimes. An exchange under section 1035 moves cash value into another contract without triggering current tax on the gain, which can help when a newer design genuinely fits better. It also restarts surrender charges and a new contestability period, and it forecloses a sale of the original policy. Compare both before committing.
What profile actually produces a good settlement offer?
A large net death benefit, generally one hundred thousand dollars at minimum and considerably more for competitive bidding, an insured around seventy or older or younger with material health impairment, and a policy the owner would otherwise surrender or allow to lapse. Underfunded universal life on an impaired insured is the classic case.
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Related Reading
- What Is Universal Life Insurance
- What Is Cost Of Insurance
- What Is A No Lapse Guarantee
- What Is An In Force Illustration
- Policy Lapsing What To Do
- 1035 Exchange Vs Settlement
- Surrender Vs Sell Policy
- Sell My Columbus Life Whole Life Policy
- Sell My Columbus Life Final Expense Policy
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.