Can You Sell a Lincoln Heritage Indexed Universal Life Policy? (2026)

Settling the question in two minutes

Pull the policy itself and read the face page rather than the return address on recent mail. Three markers give you the answer.

• Issuing company. “Lincoln Heritage Life Insurance Company” is one company; “The Lincoln National Life Insurance Company” or “Lincoln Life & Annuity Company of New York” belong to Lincoln Financial Group. They are not affiliated.
• Home office. Phoenix, Arizona points to Lincoln Heritage, which is domiciled in Illinois and therefore supervised by the Illinois Department of Insurance. Fort Wayne, Indiana or Syracuse, New York points to Lincoln Financial, supervised by the Indiana Department of Insurance and the New York Department of Financial Services respectively.
• Product name and structure. Funeral Advantage is a whole life contract with a fixed premium and a modest face amount. An indexed universal life contract has an account value, a cost of insurance charge deducted monthly, and index account options with caps and participation rates. Those are structurally different documents and they do not look alike.

Once you know which company you are dealing with, call that company’s own service line and ask for the product name and policy form number. Form numbers are unambiguous where marketing language is not. If the answer is Funeral Advantage, our page on Lincoln Heritage whole life coverage covers the analysis; if it is term coverage, see Lincoln Heritage term policies.

If it is Funeral Advantage: the size problem is the whole story

A Funeral Advantage policy in the $1,000 to $35,000 range sits below the face amount at which a life settlement market functions. The reason is fixed cost, not carrier quality. A provider that acquires a policy orders complete medical records from every treating physician, commissions independent life expectancy reports, funds legal review and escrow, and then commits to paying premiums for as long as the insured lives. Those front-end costs run several thousand dollars per file whether the death benefit is $10,000 or $2 million.

The consequence is that most funded buyers work from about $100,000 of death benefit upward, and files below roughly $50,000 are declined at intake rather than shopped. That does not change with persistence, and anyone who suggests otherwise on a $15,000 burial policy deserves scrutiny. Our page on the minimum policy size for a life settlement explains where the line actually falls.

What is worth doing instead on a small whole life contract: ask the carrier in writing for the reduced paid-up death benefit, the extended term amount and period, and the net cash surrender value after any loan, all as of the same date. Ask whether any graded or limited benefit period has ended. And read the rider schedule for an accelerated death benefit provision, which on a small policy is usually the fastest money available and requires no transaction at all.

If it is an indexed universal life policy: how crediting really works

An indexed universal life contract does not own the index. The carrier holds general account assets, buys options with a slice of the earnings, and credits your account value by formula. Three levers control what you actually receive.

The cap is the maximum credited rate for the segment. An 8 percent cap credits 8 percent whether the index rose 9 percent or 29 percent. The participation rate is the share of the index move you receive before the cap applies; 70 percent participation on a 10 percent move credits 7 percent. The floor, usually zero, means a year in which the index falls 25 percent credits zero rather than reducing account value by the index loss. That downside protection is genuine and it is the product’s central selling point.

Two features get glossed over at the point of sale and matter enormously over decades. Index credits are almost always computed excluding dividends, which historically make up a meaningful share of total index return. And caps and participation rates are declared by the carrier, not guaranteed; they can be lowered over time down to a contractual 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 its terms. See how indexed universal life works for the full mechanics.

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

The failure pattern is predictable enough to describe in advance. Illustrations at issue project a level credited rate across forty years. Actual crediting is lumpy, and several zero-credit years clustered together do far more damage than the arithmetic average suggests, because the account value that would have compounded never existed. At the same time the cost of insurance charge – deducted monthly from account value, based on the net amount at risk and the insured’s attained age – climbs steeply past age seventy and becomes punishing past eighty.

Those two forces feed each other. A smaller account value means a larger net amount at risk, which means a larger monthly deduction, which means a smaller account value still. That is the lapse spiral, and once it is running a contract that looked comfortable at year fifteen can be projecting lapse by year twenty-five. Our page on what the cost of insurance charge actually is explains the deduction that drives it.

Regulators tightened illustration rules precisely because of this gap. Actuarial Guideline 49 took effect in 2015 and capped the maximum illustrated crediting rate using a prescribed benchmark. AG 49-A, effective for illustrations from late November 2020, addressed multiplier and bonus structures being used to illustrate around the original limit. AG 49-B, effective May 1, 2023, tightened treatment of proprietary and volatility-controlled index accounts and of fixed-account arbitrage. Each round made new illustrations more conservative. None of it retroactively changed a policy sold in 2011.

The one document that answers the question

Request an in-force illustration and be specific about what you want. Ask for a run at current assumptions, a second run at guaranteed assumptions – meaning guaranteed maximum cost of insurance charges and the guaranteed minimum crediting rate – and a solve showing the annual premium required to carry the policy to maturity.

The guaranteed-assumption run is the honest one. It answers the only question that matters to anyone underwriting the contract, including you: if the carrier exercises every right the policy gives it, in what year does this contract run out of money? A policy that lapses at attained age 79 on guaranteed assumptions is a fundamentally different asset from one that carries to 100, no matter how similar the current-assumption pages appear. Buyers model the guaranteed column because they are the ones who would fund premiums for the next twenty years.

Carriers do not always produce all three items on a first request, and turnaround commonly runs two to four weeks. Our script for requesting an in-force illustration gives you the exact wording, and what an in-force illustration is explains how to read it. Order it before you decide anything, because keeping, reducing the death benefit, surrendering and exploring a sale all depend on that answer.

MEC funding, taxes, and what to do next

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

MEC status does not block a transfer and does not by itself reduce an offer. What it changes is the after-tax comparison among options: borrowing to fund premiums may create current taxable income, surrendering produces ordinary income to the extent of gain over basis, and proceeds from a sale are taxed under a different framework that turns on basis and on whether the insured is chronically or terminally ill. Those interactions are technical and belong with your own CPA rather than a web page. Read what a MEC is for background.

Practical next steps: establish the issuing company from the face page, get the product name and form number, and – if it is index-linked – order the two in-force illustrations. If it is Funeral Advantage, request the nonforfeiture figures and read the rider schedule instead. Either way, Pine Lake Life Solutions will read what you have at no cost as an educational free policy review. We do not purchase policies and are not licensed in every state, and nothing here is legal, tax or investment advice. Send the policy cover page or call (305) 209-7183. For the general framework on index-linked contracts, see selling an indexed universal life policy.

Frequently Asked Questions

Does Lincoln Heritage sell indexed universal life?

No. Lincoln Heritage Life Insurance Company is a final expense specialist. Its business is the Funeral Advantage program, a simplified-issue whole life product with coverage in roughly the $1,000 to $35,000 range and a Funeral Consumer Guardian Society membership attached. If a document in your file says indexed universal life, the issuing company is almost certainly Lincoln Financial Group, which is unrelated.

Are Lincoln Heritage and Lincoln Financial the same company?

They are not affiliated in any way. Lincoln Heritage is family-owned, domiciled in Illinois, with administrative offices in Phoenix, Arizona. Lincoln Financial Group’s principal life insurer, The Lincoln National Life Insurance Company, is domiciled in Indiana with its home office in Fort Wayne. Different regulators, different products, different companies. The similar names cause frequent confusion.

My index rose 20 percent but I was credited 8 percent. Why?

Because 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 regardless of how far the index rose. Caps and participation rates are declared by the carrier and can be reduced over time down to a contractual minimum that is usually far below the rate quoted at issue.

What should I ask for before deciding anything about an IUL?

An in-force illustration run at current assumptions, a second run at guaranteed assumptions using guaranteed maximum cost of insurance charges and the guaranteed minimum crediting rate, and a solve for the annual premium required to carry the policy to maturity. The guaranteed run is the one that shows the true worst case and it is the column any buyer would model. Allow two to four weeks.

Can I sell a $15,000 Funeral Advantage policy?

Realistically no. Fixed transaction costs of several thousand dollars per file – medical record retrieval, independent life expectancy reports, legal review, escrow – do not scale down with the death benefit, so files below roughly $50,000 are declined at intake. Look instead at the reduced paid-up option, the extended term option, the net cash surrender value, and any accelerated death benefit rider.

Does Pine Lake purchase policies from either company?

No. Pine Lake Life Solutions does not purchase policies and is not licensed in every state. We provide a free educational policy review: send the policy cover page and, if the contract is index-linked, the in-force illustration once it arrives. We will identify which company issued it, what the contract actually is, and whether the secondary market is realistically available. Call (305) 209-7183.

Related Reading

• What Is Indexed Universal Life
• What Is An In Force Illustration
• Can I Sell An Indexed Universal Life Policy
• What Is Cost Of Insurance
• Modified Endowment Contract Mec
• Minimum Policy Size For A Life Settlement
• Request In Force Illustration Script
• Sell My Lincoln Heritage Whole Life Policy
• Sell My Lincoln Heritage Term 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.