Before you can answer whether an indexed universal life policy can be sold, you have to establish two things: which company actually issued it, and whether the contract is on a path to lapse. The second question is the one that changes people’s decisions, because an IUL that looked like a lifetime asset on the day it was sold can be quietly eating itself by year twenty.
The name on the envelope is a real obstacle here. “Great Western Life” is not a single, unambiguous carrier. At least three companies with similar names operate or have operated in the United States and Canada, in different states, under different regulators, with completely different product lines. One of them specializes in pre-need funeral funding and has never been an indexed universal life carrier at all. Getting this right on day one prevents a month of misdirected paperwork.
What follows covers both: how to identify the issuer, and then the mechanics that actually determine an IUL’s value — cap rates, participation rates, floors, the gap between illustrated and credited interest, and the cost of insurance charge that climbs every year the insured ages.
In This Article
- Establish the Issuing Company First — the Names Overlap
- Cap, Participation Rate, Floor: The Three Levers
- Why a Policy That Illustrated Well in Year One Heads for Lapse by Year Twenty
- AG 49, AG 49-A, and AG 49-B: What Changed in Illustrations
- The Only Document That Actually Settles the Question
- MEC Status and the Tax Profile of a Heavily Funded IUL
- Ranking Your Options Honestly
- Frequently Asked Questions
Establish the Issuing Company First — the Names Overlap
Read the legal entity name printed on the policy’s specifications page, not the marketing name on the cover, and note the NAIC company code. Then check which of these you are holding.
Great Western Insurance Company is domiciled in Utah, based in Ogden, and is regulated by the Utah Insurance Department. Its business has historically been pre-need funeral funding and final expense life insurance sold through funeral homes and independent agents. Global Atlantic Financial Group acquired the company in 2020, and Global Atlantic itself became a wholly owned KKR subsidiary in January 2024. This carrier’s product line is small-face permanent coverage. An indexed universal life contract from this block would be unusual, and you should not assume one exists simply because the name matches.
Great-West Life & Annuity Insurance Company — note the hyphen — was Colorado-domiciled and regulated by the Colorado Division of Insurance. It transferred substantially all of its individual life and annuity business to Protective Life Insurance Company effective June 1, 2019, and its remaining retirement business was rebranded under the Empower name. If your servicing correspondence comes from Protective, this is your carrier.
The Great-West Life Assurance Company was Canadian, headquartered in Winnipeg, and amalgamated with London Life and Canada Life into The Canada Life Assurance Company on January 1, 2020. Canadian contracts are outside the U.S. secondary market entirely.
The honest position, as of 2026, is this: we can confirm active in-force blocks under these names, but we cannot confirm a currently marketed retail indexed universal life product sold as “Great Western Life.” Rather than assert a product name that may not exist, treat your contract as part of an in-force block and let the specifications page tell you what it is. Look up the NAIC code at the NAIC Consumer Information Source to identify the current legal entity and its domicile.
Cap, Participation Rate, Floor: The Three Levers
An indexed universal life policy does not invest in the stock market. The insurer credits interest based on the movement of an external index — commonly the S&P 500 price return, excluding dividends — filtered through contractual limits the carrier controls.
The cap is the maximum credited rate for the segment period. If the cap is 8.5% and the index gains 22%, you are credited 8.5%.
The participation rate is the percentage of index movement counted before the cap is applied. A 60% participation rate on a 20% index gain yields 12% before any cap.
The floor is the minimum, usually 0% or 1%. In a year the index falls 30%, the account is credited the floor. That protection is real, and it is also the thing you are paying for through the cap.
The point almost everyone misses: caps and participation rates are not guaranteed at their current level. They are declared by the carrier subject to a contractual guaranteed minimum, and the guaranteed minimum is often far below what was illustrated. A policy sold on a 10% cap may carry a guaranteed minimum cap of 3%. The carrier is entitled to move from one to the other, and in blocks under earnings pressure, that has happened. Our plain-English explainer on how indexed universal life works covers the same ground without carrier specifics.
Excluding dividends matters more than people expect. Over long periods, dividends have represented a substantial share of total S&P 500 return. A price-return index with an 8% cap and a 0% floor produces meaningfully less than headline market performance across a full cycle, before charges.
Why a Policy That Illustrated Well in Year One Heads for Lapse by Year Twenty
Two forces work against a flexible-premium contract as the insured ages.
The first is cost of insurance. The monthly COI charge is calculated on the net amount at risk — the death benefit minus the accumulated value — multiplied by a rate that rises with the insured’s attained age. At 55, that rate is small. At 82, it can be many multiples of the age-55 rate on the same policy. If the account value has not grown as illustrated, the net amount at risk stays large, so the rising rate is applied to a large base. The charge compounds against you from both directions at once. The mechanics are laid out in more detail in our guide to how cost of insurance charges work.
The second is the difference between illustrated and credited interest. A policy illustrated at a level 7.5% assumed a smooth annual return that a capped, floored, price-return crediting method does not produce. Real sequences include several 0% years. Each 0% year is not neutral — charges still come out — so the account value falls behind the illustration and never catches up, because the illustration compounded from a higher base every year thereafter.
Put those together and you get the classic pattern: a policy that funded comfortably for fifteen years starts consuming account value faster than premiums and credits replace it, and the carrier sends a notice that the planned premium will no longer carry the contract to maturity. That notice is not a formality. It is the last clear warning before the policy enters a grace period.
Some carriers reduced cap rates on older IUL blocks and raised COI rates on universal life blocks generally during the low-interest-rate years of the 2010s, prompting litigation and regulatory attention across the industry. If your policy’s cap has dropped materially since issue, request the contractual guaranteed minimum in writing and compare it to what is being credited today.
| Option | Best when | What you give up | Typical timeline |
|---|---|---|---|
| Keep and increase premium | Coverage still needed and the new premium is affordable | Ongoing cash outlay | Immediate |
| Reduce the face amount | Some coverage needed, current premium unaffordable | Part of the death benefit | 2 to 6 weeks |
| Surrender for cash value | High net cash value, insured in good health | All coverage; possible taxable gain | 2 to 6 weeks |
| Life settlement | Insured 65+, health impairments, face $100k+ | All coverage; medical record disclosure | 60 to 120 days |
| Lapse | Almost never | Everything, including cash value | Grace period only |
AG 49, AG 49-A, and AG 49-B: What Changed in Illustrations
Illustration abuse in indexed products was widespread enough that the NAIC intervened three times. Knowing which regime produced your illustration tells you how aggressive it was allowed to be.
Actuarial Guideline 49 was adopted by the NAIC in 2015, with illustration provisions taking effect September 1, 2015. It capped the maximum illustrated crediting rate using a prescribed lookback methodology, ending the practice of illustrating double-digit returns indefinitely.
AG 49-A followed in 2020, effective for new illustrations issued on or after November 25, 2020. It targeted multiplier and bonus designs that had been used to route around the original guideline, and constrained how policies with such features could be shown.
AG 49-B was adopted in 2023 with an effective date of May 1, 2023, addressing proprietary and volatility-controlled indices and the use of fixed-account arbitrage to inflate illustrated results.
The practical takeaway: a sales illustration you received in 2012 was produced under rules that no longer exist, and it is not evidence of anything about your policy today. Do not use it to make a keep-or-sell decision. Ask for a current in-force illustration instead.
The Only Document That Actually Settles the Question
Request an in-force illustration from the servicing carrier, and request it in two versions:
- At current assumptions — current caps, current COI rates, current charges — with your planned premium continuing unchanged. This shows the optimistic case.
- At guaranteed maximum charges and the guaranteed minimum crediting rate. This shows what the carrier is contractually permitted to do. If the guaranteed column shows the policy lapsing at age 78, that is a real risk, not a theoretical one.
Also ask for a version showing the premium required to carry the policy to age 100 or maturity under current assumptions, and another showing the effect of reducing the face amount. Carriers must provide in-force illustrations on request; there may be a nominal fee and a two to four week turnaround. Our guide to reading an in-force illustration explains what each column means.
Two other data points belong in the same request: the current net cash surrender value after any surrender charge, and the current outstanding policy loan balance with accrued interest. A loan that exceeds basis creates a taxable event on surrender or lapse — the notorious situation where a policyholder surrenders a contract, receives almost nothing, and gets a 1099 anyway. Get those figures before making a decision, and take them to your own tax advisor.
MEC Status and the Tax Profile of a Heavily Funded IUL
An IUL funded aggressively in the early years can fail the seven-pay test of Internal Revenue Code section 7702A and become a modified endowment contract. A MEC is still life insurance — the death benefit remains income-tax-free to the beneficiary — but living distributions change character entirely. Withdrawals and loans from a MEC are taxed on a last-in, first-out basis, so gain comes out first, and a 10% additional tax generally applies before age 59½.
This matters directly to a keep-or-sell analysis because the tax cost of accessing money through a policy loan may be far higher than expected. It is also worth knowing that the Consolidated Appropriations Act, 2021 lowered the interest rate assumptions used in the section 7702 definitional tests beginning in 2021, which changed how much premium can be paid into a policy of a given face amount for contracts issued after that change.
On the sale side, the Tax Cuts and Jobs Act of 2017 simplified basis calculation for life settlements: it removed the requirement to reduce basis by the cost of insurance charges, reversing the position the IRS had taken in Revenue Ruling 2009-13, and applied that treatment to transactions entered into after August 25, 2009. Whether any particular sale produces ordinary income, capital gain, or neither depends on your basis, the policy’s cash surrender value, and the sale price. That is a question for your own CPA — the general framework here is not advice about your return. See what makes a policy a MEC for the underlying test.
Ranking Your Options Honestly
There are five real paths, and for most policyholders one of them is clearly better than the rest once the numbers are on the table.
Keep and fund properly. If the in-force illustration shows the policy sustainable with a manageable premium increase and the coverage is still needed, this is usually the answer. Nothing beats a policy you actually keep.
Reduce the face amount. Lowering the death benefit lowers the net amount at risk and therefore the COI charge. This can rescue a struggling policy without additional premium and is badly underused.
Surrender for cash value. For a policy with substantial net cash value and a healthy insured, surrender frequently beats any settlement offer. Any honest analysis says so when it is true.
Sell in the secondary market. Realistic mainly when the insured is 65 or older with meaningful health impairments and the face amount is generally $100,000 or more. Offers exceed cash surrender value in the files where they exist at all — which is the entire point of getting a valuation before surrendering.
Let it lapse. Almost always the worst outcome, because it discards whatever value exists. Before allowing a lapse, price the other four. Our side-by-side on surrendering versus selling shows how the comparison usually breaks.
Frequently Asked Questions
My cap rate dropped from 12% to 7%. Can the carrier do that?
Generally yes, within the contract. Caps and participation rates are declared rates the insurer sets periodically, subject to a guaranteed minimum written into the policy. Request that guaranteed minimum in writing and compare it to what is credited now. A large gap between the two tells you how much further the rate can fall, and that gap belongs in any keep-or-sell analysis.
Does a policy loan stop me from selling the policy?
No, but it reduces what you receive. A buyer purchases the policy subject to the loan or the loan is repaid from proceeds at closing, so the net figure is what matters. Get the exact loan balance with accrued interest as of a current date. Loans against older contracts can compound quietly for years and surprise the owner at exactly the wrong moment.
How do I get an in-force illustration if I do not know who services the policy?
Start with the NAIC company code on the specifications page and look it up at the NAIC Consumer Information Source, which lists the current legal entity and its domicile. Your own state department of insurance can also identify the servicing company for a block that changed hands. Send the request in writing and keep a copy with the date.
Is an indexed universal life policy worth more than a plain universal life policy to a buyer?
Not inherently. Buyers price the death benefit, the insured’s life expectancy, and the premium needed to carry the policy. Crediting mechanics matter only insofar as they affect that carrying cost. An IUL with a large account value can require less outside premium, which helps, but the driver is nearly always life expectancy rather than the crediting method.
The agent who sold me the policy says everything is fine. Should I get a second look?
Ask for the in-force illustration at guaranteed maximum charges and read the guaranteed column yourself. It costs nothing and it is the document that settles the argument. If the guaranteed column shows the policy lapsing during the insured’s likely lifetime, the reassurance was based on current assumptions the carrier is not obligated to maintain.
What face amount do I need before a sale is realistic?
Institutional buyers typically start at $100,000 of death benefit, and many prefer $250,000 or more, because the fixed costs of two life expectancy reports, legal review, escrow and ongoing tracking do not scale down. Smaller policies occasionally trade when the insured’s life expectancy is short, but they are the exception rather than the rule.
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Related Reading
- What Is Indexed Universal Life
- Can I Sell An Indexed Universal Life Policy
- What Is Cost Of Insurance
- What Is An In Force Illustration
- What Is A Modified Endowment Contract
- Surrender Vs Sell Policy
- How Much Is My Policy Worth
- Sell My Great Western Life Final Expense Policy
- Sell My Great West Life Universal Life 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.