August 7, 2026
3:27 pm

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

Before pricing anything, verify that the certificate is actually indexed universal life, because the published Knights of Columbus portfolio does not include an IUL product. The society’s individual life lineup is built on participating permanent whole life, universal life, and a term series offered in 10, 15 and 20-year designs starting at $100,000 of coverage for members ages 18 through 70, alongside annuities, long-term care and disability income. If a statement says “universal life” and shows an interest crediting rate, that is a current-assumption universal life certificate, not an index-linked one, and it behaves differently in every respect that matters.

That distinction is not pedantic. Current-assumption UL credits a declared rate that the carrier can change within a contractual guaranteed minimum. Indexed UL credits a formula tied to an external index, subject to a cap, a participation rate and a floor, and the gap between what an index does and what a policy is credited is where most owner disappointment lives. If your certificate really is index-linked, everything below applies. If it is not, the mechanics are simpler but the underlying question – is this contract on track to survive to the insured’s death – is exactly the same, and the document that answers it is the same too.

In This Article

Confirm the chassis before you do anything else
How indexed universal life actually credits interest
Why the year-one illustration and year-twenty reality diverge
The one document that settles the question
The MEC line and why it changes the tax picture
Whether an index-linked certificate can trade at all
Frequently Asked Questions

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

Confirm the chassis before you do anything else

Call the Supreme Council’s home office in New Haven, Connecticut and ask for two things: the product name and form number your certificate was issued on, and a current in-force illustration. The form number is the definitive answer. Statements use marketing language loosely, agents describe products from memory, and family members repeat what they half-remember hearing at the kitchen table twenty years ago. A form number is unambiguous.

While you have someone on the phone, ask whether the certificate is participating, whether it has any secondary or no-lapse guarantee rider, and what the current cost of insurance basis is. The Knights of Columbus is a fraternal benefit society chartered and supervised in Connecticut under Title 38a of the Connecticut General Statutes, with the Connecticut Insurance Department as its domiciliary regulator. What it issues are membership certificates rather than ordinary policies, and the society’s charter, constitution and laws are incorporated into the contract by reference – a feature that has no equivalent in a policy issued by a stock or mutual insurer. One consequence worth knowing: most state life and health insurance guaranty association statutes follow the NAIC model and exclude fraternal benefit societies, so the usual state backstop generally does not apply. Our page on what guaranty associations cover explains the general rule.

If it turns out you are holding a small permanent certificate rather than an accumulation-oriented one, the analysis is different again and is covered on our page about small Knights of Columbus certificates.

How indexed universal life actually credits interest

An IUL policy does not own the index and does not receive dividends from it. The carrier holds general account assets, buys options on the index with a slice of the earnings, and credits your account value according to a formula. Three levers control the result.

The cap. The maximum credited rate for the segment period. If the cap is 8 percent and the index returns 22 percent, you are credited 8 percent.
The participation rate. The share of the index move you receive before the cap applies. A 70 percent participation rate on a 10 percent index move credits 7 percent.
The floor. Usually zero percent, occasionally one percent. In a year the index falls 30 percent, you are credited zero rather than losing account value to the index. That protection is genuine and it is the product’s main selling point.

Two features that get glossed over in the sales conversation matter a great deal over decades. Index credits are almost always calculated excluding dividends, which historically account for a meaningful share of total index return. And caps and participation rates are not guaranteed; they are declared by the carrier and can be lowered, subject only to a contractual guaranteed minimum that is typically far below the rate at issue. A policy sold with a 12 percent cap can be running an 8 percent cap fifteen years later, entirely within the contract. See how indexed universal life works for the mechanics in more detail.

Why the year-one illustration and year-twenty reality diverge

The failure pattern is consistent enough to describe in advance. An illustration at issue projects a level credited rate for forty years. Real crediting is lumpy: several zero-credit years clustered together do far more damage than an average return suggests, because the account value that would have compounded is simply not there. Meanwhile the cost of insurance charge – deducted monthly from account value, based on the net amount at risk and the insured’s attained age – rises steeply after roughly age seventy and becomes brutal after eighty.

Those two forces compound against each other. Lower account value means a larger net amount at risk, which means a larger monthly COI deduction, which means lower account value still. That is the spiral, and once it is running a policy that looked comfortable at year fifteen can be projecting lapse by year twenty-five. Our page on rising universal life costs covers what owners can and cannot do about it, and what cost of insurance actually is explains the charge itself.

Regulators tightened what illustrations may show precisely because of this gap. Actuarial Guideline 49 took effect in 2015 and capped the maximum illustrated crediting rate using a prescribed benchmark calculation. AG 49-A, effective for illustrations from late November 2020, addressed multipliers and bonus structures that were being used to illustrate around the original limit. AG 49-B, effective May 1, 2023, went further on proprietary and volatility-controlled index accounts and on fixed-account arbitrage. Each round made new illustrations more conservative. None of it retroactively changed the policy you were sold in 2012.

Document to request	What it tells you	Typical wait
Product name and form number	Whether the certificate is truly index-linked or current-assumption UL	Same call
In-force illustration, current assumptions	Projected lapse year if nothing changes	2-4 weeks
In-force illustration, guaranteed assumptions	Worst-case lapse year; the number buyers model	2-4 weeks
Premium-to-endow solve	Annual cost to carry the certificate to maturity	2-4 weeks
Written assignability answer from the Supreme Council	Whether transfer to a third party is even possible	Several weeks
Current cap and participation rate history	Whether crediting terms have been reduced since issue	Varies

Why the year-one illustration and year-twenty reality diverge

The one document that settles the question

Request an in-force illustration and specify what you want: current assumptions, and a second run at guaranteed assumptions, meaning guaranteed maximum cost of insurance charges and the guaranteed minimum crediting rate. Also ask for a solve showing the annual premium required to carry the certificate to age 100 or maturity.

The guaranteed-assumption run is the one that tells the truth. It answers the only question that matters to a buyer and should matter to you: if the carrier exercises every right the contract gives it, when does this policy run out of money? A certificate that lapses at age 78 on guaranteed assumptions is a different asset from one that carries to 100, no matter how similar the current-assumption pages look. Buyers model the guaranteed column because they will be the ones paying premiums for the next twenty years.

Carriers do not always produce all of this on a first request. Our script for requesting an in-force illustration gives you the exact wording, and what an in-force illustration is explains how to read the columns once it arrives. Expect two to four weeks. Order it before you have decided anything, because every option – keep, reduce the death benefit, surrender, or explore a sale – depends on knowing the answer.

The MEC line and why it changes the tax picture

Accumulation-oriented policies are often funded close to the modified endowment contract limit, and some cross it. A policy becomes a MEC when premiums paid in the first seven years exceed the seven-pay limit under Internal Revenue Code section 7702A, and once a contract is a MEC it stays one, including after most material changes. The practical consequence is that loans and withdrawals from a MEC are taxed on a last-in, first-out basis to the extent of gain, and a ten percent additional tax generally applies before age 59 and a half. That is the opposite of the tax treatment non-MEC policy owners expect.

MEC status does not prevent a sale and does not by itself lower an offer. What it does is change the after-tax comparison between options. Borrowing against a MEC to fund premiums may generate current taxable income; surrendering it produces ordinary income to the extent of gain over basis; the tax treatment of proceeds from a sale follows a different framework that turns on basis and on whether the insured is chronically or terminally ill. Those interactions are genuinely technical and they are not something to work out from a web page. Read what a MEC is for background, then put the numbers in front of your own CPA before you act.

Whether an index-linked certificate can trade at all

Assume for a moment the certificate really is index-linked and freely assignable. Institutional buyers do purchase indexed universal life, and the underwriting is the same as for any permanent policy: the insured’s age and health drive a life expectancy estimate, and the projected premium stream drives the price. IUL files draw closer scrutiny than guaranteed universal life because the future premium requirement is variable rather than fixed, which is precisely why the guaranteed-assumption illustration is the document buyers demand first.

Two Knights-specific caveats apply and both need to be answered before anyone spends time on a file. First, size: most funded buyers begin looking at $100,000 of death benefit and many set a higher practical minimum. Second, and more important, transferability. A fraternal certificate is bound up with the society’s laws and with membership status in a way an ordinary policy is not, and assignment to an unrelated third party may be restricted or conditioned. Write to the Supreme Council and ask, in writing, whether the certificate is assignable to a non-member third party and whether the society’s consent is required. Get that answer before anything else; if the answer is no, nothing else matters.

If you want an outside read on what you hold, Pine Lake Life Solutions provides a free educational policy review. We do not purchase policies and are not licensed in every state, and nothing on this page is legal, tax or investment advice. Send the certificate cover page and the in-force illustration once it arrives, or call (305) 209-7183. For the general framework on index-linked contracts, see selling an indexed universal life policy.

Frequently Asked Questions

Does the Knights of Columbus offer indexed universal life?

The published individual life portfolio is built on participating whole life, universal life and a term series, alongside annuities, long-term care and disability income. We have not confirmed an indexed universal life product in that lineup. Ask the Supreme Council for the product name and form number on your certificate rather than relying on how a statement or an agent described it.

My index returned 18 percent but I was credited 8. Is that an error?

Almost certainly not. Index credits are subject to a cap, a participation rate and a floor, and are typically calculated excluding index dividends. An 8 percent cap credits 8 percent no matter how far the index rose. Caps and participation rates are declared by the carrier and can be reduced over time, subject only to a contractual guaranteed minimum that is usually well below the rate at issue.

What did AG 49, 49-A and 49-B actually change?

They progressively limited what an indexed universal life illustration is permitted to show. AG 49 took effect in 2015 and capped the maximum illustrated crediting rate using a prescribed benchmark. AG 49-A, effective in late November 2020, addressed multiplier and bonus structures. AG 49-B, effective May 1, 2023, tightened treatment of proprietary and volatility-controlled index accounts. None of it retroactively changed older contracts.

Why do buyers insist on the guaranteed-assumption illustration?

Because it shows what happens if the carrier exercises every right the contract gives it: guaranteed maximum cost of insurance charges and the guaranteed minimum crediting rate. A buyer will be funding premiums for as long as the insured lives, so the worst case is the case it has to price. A policy that lapses at 78 on guaranteed assumptions is a materially different asset from one that carries to 100.

Does modified endowment contract status stop a sale?

No. MEC status does not prevent a transfer and does not by itself reduce an offer. What it changes is the after-tax comparison among your options, because loans and withdrawals from a MEC are taxed last-in first-out to the extent of gain, with a ten percent additional tax generally applying before age 59 and a half. Take the specific numbers to your own tax advisor.

Can a fraternal certificate be assigned to an investor?

That has to be answered from the certificate and the society’s laws, which are incorporated into the contract by reference. Ordinary life policies are freely assignable; fraternal certificates may condition or restrict assignment and are tied to membership status. Write to the Supreme Council in New Haven and ask whether assignment to a non-member third party is permitted and whether consent is required.

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