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

Number one: account value, and what it is really telling you

Account value is the pool the policy spends from. Premium goes in, charges come out monthly, and index credits are added when a segment matures. If account value is flat or falling year over year while you are still paying premium, the policy is consuming more than it is earning, and every additional year makes the arithmetic worse rather than better.

Compare three years of statements side by side, not just the current one. A single soft year proves nothing; a three-year decline is a trend. Also separate account value from cash surrender value. If the policy is still inside its surrender charge period — commonly ten to fifteen years from issue — the amount you could actually walk away with is lower than the account value shown, sometimes by a great deal. Ask the carrier for the current surrender charge schedule and the year it reaches zero.

One more line to locate: any outstanding policy loan and its accrued interest. Loans are deducted from settlement proceeds dollar for dollar, and on a policy that has been borrowed against for years, the loan can quietly approach the account value. A lapse with a loan outstanding can produce a taxable event on income the owner never received, which is one of the least fair outcomes in all of insurance and one of the best reasons not to simply stop paying.

Number two: monthly deductions, and why they accelerate

Your statement itemizes what the policy takes out each month. The largest line is almost always the cost of insurance charge, and it works like this: a rate per thousand dollars of net amount at risk, where net amount at risk is the death benefit minus the account value.

Two forces push that charge upward simultaneously as an insured ages. The rate per thousand climbs with attained age, gently through the sixties and steeply after seventy-five. And when account value has underperformed, the net amount at risk stays large, so the rising rate applies to a bigger base. The two compound. It is entirely ordinary for a policy deducting $210 a month at age sixty-two to be deducting $2,900 a month at eighty-four on the same face amount.

This is the whole reason an IUL that looked healthy in year one can be scheduled to fail in year twenty-two on the same premium. The original design assumed account value would grow fast enough to outrun rising charges. When credited rates came in below illustration — because caps were reduced, or because flat index years posted 0 percent while charges continued — the account value never got ahead, and the charges started eating principal. How cost of insurance charges work covers the mechanics in more detail.

Worth stating plainly: a 0 percent floor protects the index credit, not the account value. In a flat year you are credited nothing while every charge is still deducted.

Number three: the projected lapse year, on guaranteed assumptions

This is the number that should drive the decision, and carriers do not volunteer it. Request an in-force illustration and specify the basis, in writing:

1. Current premium, guaranteed assumptions. Guaranteed maximum cost of insurance rates and the guaranteed minimum crediting rate stated in the contract. This shows the earliest year the policy lapses if the carrier exercises every right it has. Read the lapse year and compare it against the insured’s realistic life expectancy.
2. Current premium, current assumptions. Today’s declared caps and current charges held level indefinitely. An optimistic bound, because caps are declared annually and have been reduced across the industry.
3. Premium required to carry to age 100 or 121. This is what keeping the policy genuinely costs going forward, and it is the correct thing to compare against any offer.

If the guaranteed-basis lapse year falls inside the insured’s life expectancy, you are paying premiums into a contract that is currently scheduled to pay nothing. That is the situation in which a settlement, a face reduction, or a surrender all become live options and doing nothing becomes the worst one. Our page on reading an in-force illustration walks through the columns line by line.

Statement line	What to look for	What it means
Account value, three years running	Flat or declining while premiums are paid	Charges exceed credits; the trend compounds
Cash surrender value vs account value	A gap between them	You are still inside the surrender charge period
Monthly cost of insurance	Year-over-year increase	Attained-age rates rising on a large net amount at risk
Outstanding loan and accrued interest	Any balance at all	Reduces proceeds dollar for dollar; lapse can be taxable
Projected lapse year, guaranteed basis	Falls inside life expectancy	The policy is currently scheduled to pay nothing

Why your original illustration was allowed to look so good

If the policy was sold before September 2015, its illustration was generated under rules the industry has since tightened twice.

The National Association of Insurance Commissioners adopted Actuarial Guideline 49 effective September 1, 2015, imposing a standardized method for the maximum crediting rate an indexed illustration may show. Carriers then built multiplier and bonus designs that restored the previous optics, and the NAIC responded with AG 49-A, effective November 25, 2020, restricting those features. Uncapped and volatility-controlled index accounts opened a further gap, and AG 49-B took effect May 1, 2023.

These guidelines govern point-of-sale illustrations. They did not change a single in-force contract. What they should change is how you use the old illustration: a 2011 projection showing a level 7.6 percent credited for forty years was permissible then and would not be permitted now, which makes it a poor benchmark for judging your policy today. Judge against a fresh guaranteed-basis in-force illustration instead. Background on the product category is in our indexed universal life explainer.

One tax item to raise with your own preparer: a policy funded heavily in its early years can fail the seven-pay test and become a modified endowment contract, which changes how loans and withdrawals are taxed during life. It does not prevent a sale but it changes what the alternatives are worth. See what a MEC is, then confirm your policy’s status with the carrier.

Illinois specifics that affect the decision

Pekin Life’s solvency regulator is the Illinois Department of Insurance, and Illinois life settlements are governed by the Illinois Viatical Settlements Act at 215 ILCS 158. If your policy was delivered in Illinois, that act sets the disclosures you must receive, the licensing standards for any provider or broker who contacts you, and the rescission period that runs after funding. If it was delivered in Indiana, Iowa, Ohio or Wisconsin — all within the group’s regional footprint — that state’s act governs instead.

One Illinois fact belongs in the keep-or-sell analysis: Illinois imposes its own estate tax with a $4 million exclusion and, unlike the federal system, no portability between spouses. A married couple cannot simply rely on the survivor inheriting the first spouse’s exclusion; it must be planned for. That means Illinois families whose federal estate tax exposure disappeared when the exclusion rose can still face a genuine state liquidity problem — and the life insurance they were about to sell may be the cheapest solution to it. Confirm your own numbers with an Illinois estate attorney or your tax advisor before treating a policy as unnecessary.

Five exits, ranked

Reduce the face amount. The most underused option in the category. Cost of insurance is charged on net amount at risk, so cutting the death benefit cuts the charge immediately and costs nothing out of pocket. If the family now needs half the coverage, ask the carrier to illustrate the reduced face before anything else.

Surrender. Fast, certain, and sometimes larger than any bid, particularly past the surrender charge period. Gain above basis is ordinary income; ask your tax preparer how it lands in your situation.

1035 exchange. Move the cash value tax-free into a guaranteed universal life policy or an annuity. Preserves deferral. A new life contract requires new underwriting, so health governs availability.

Sell. Realistic when the insured is roughly sixty-five or older with meaningful health history, face amount is $100,000 or more, and the policy would otherwise lapse or surrender for far less than a buyer would pay. Compare any offer against net surrender value, not against face amount.

Lapse. Almost always the worst outcome, and actively dangerous if a loan is outstanding.

Pine Lake Life Solutions provides education and a free policy review. Pine Lake does not purchase policies and we are not licensed in every state. Send the policy cover page and the guaranteed-basis in-force illustration and we will tell you which of these five your contract actually supports.

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Frequently Asked Questions

Does Pekin Life issue indexed universal life?

We could not confirm an IUL product in Pekin Life’s lineup as of 2026. The company’s individual life shelf is described as term life, whole life and universal life, alongside Medicare supplement, annuity and pre-need coverages. If your statement shows caps, participation rates and segment maturity dates, verify the issuing company printed on the policy cover page before proceeding.

How large is Pekin Life?

At its 2026 annual meeting the company reported net income of $8.3 million for the year ended December 31, 2025 and life insurance in force exceeding $21.9 billion at year-end 2025. It is an Illinois-domiciled multi-line insurer headquartered in Pekin, Illinois, operating within the Pekin Insurance group alongside Farmers Automobile Insurance Association.

My account value is dropping but the index never lost money. How?

The 0 percent floor protects the index credit, not the account value. In a flat or down year you receive no credit while the policy still deducts cost of insurance, per-thousand charges, administrative fees and rider costs. Add cost of insurance rates that climb with attained age and the account value falls steadily without any negative crediting year ever appearing.

Which in-force illustration should I request?

Three of them: current premium at guaranteed assumptions, current premium at current assumptions, and the premium required to carry the policy to age 100 or 121. The guaranteed version shows the earliest realistic lapse year and should drive the decision. Also ask for the surrender charge schedule and any outstanding loan balance with accrued interest.

Does the Illinois estate tax matter to this decision?

It can. Illinois imposes an estate tax with a $4 million exclusion and no portability between spouses, so a married couple must plan for it rather than relying on the survivor inheriting the first spouse’s exclusion. Families whose federal exposure disappeared may still face a real Illinois liability, and the policy may be the cheapest solution. Confirm with an Illinois estate attorney.

What is the cheapest way to keep an underfunded IUL alive?

Usually reducing the death benefit. Because cost of insurance is charged on the net amount at risk — death benefit minus account value — cutting the face amount cuts the largest monthly charge immediately, at no out-of-pocket cost. Ask the carrier to illustrate the reduced face amount on a guaranteed basis before you consider surrendering or selling.

Related Reading

• Can I Sell An Indexed Universal Life Policy
• What Is Indexed Universal Life
• What Is Cost Of Insurance
• In Force Illustration Why It Matters
• What Is A Modified Endowment Contract
• Life Settlement Vs Lowering The Death Benefit
• Sell My Pekin Life Universal Life Policy
• Sell My Pekin Life Whole Life Policy
• What Is Cash Surrender Value

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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.