How much do universal life insurance premiums go up with age in Burleson?

Why does the cost inside a universal life policy rise every year?

Most universal life policies are built on a yearly cost of insurance. Each month the insurer takes a charge from your policy to pay for the coverage. That charge is based on your age that year, so it goes up every birthday.

In your 40s and 50s the yearly increases are small. In your 70s and 80s they get much bigger, because the odds of a claim go up quickly at those ages. The policy also takes out fees for administration, and sometimes a separate charge per thousand dollars of coverage.

Your contract shows two sets of numbers. One is what the insurer charges now. The other is the guaranteed maximum it is allowed to charge. Current charges can rise toward that maximum, but they can't go past it.

Does my premium bill go up, or just the charges inside the policy?

Here is where universal life gets confusing. The premium you send in can stay the same for years while the charges inside the policy climb. Your payment goes into the cash value. The monthly charges come out of it. Interest or index credits get added on top.

When you are younger, your payment usually covers the charges with room to spare, and the extra builds cash value. Later, the charges can grow larger than your payment. Then the policy starts drawing down the cash value to make up the difference.

As long as there is enough cash value, nothing changes on your bill. When the cash value runs low, the insurer will tell you the policy needs more money to stay in force. That notice is often the first time people learn their costs went up.

How do I know if my policy is running short?

Your annual statement is the place to start. Look at the cash value from one year to the next. If it has stopped growing or is shrinking while you pay the same premium, the charges have caught up with you.

The better tool is an in-force illustration. You can ask your insurer for one at any time. It projects how your policy will do from today forward, using current charges and current crediting rates, and shows the age when coverage would end if nothing changes.

• Cash value that drops year over year
• A lapse warning or a notice asking for a higher payment
• An illustration showing coverage ending before age 90 or 100
• Credited interest well below what you were shown when you bought the policy
• Loans or withdrawals taken out of the policy over the years

Should you adjust your policy or replace it?

Our first move is almost always to see if the policy you already have can be put back on track. You've paid into it for years. A new policy means new underwriting at your current age and health, a new two-year contestability period and often new surrender charges. Those costs are easy to overlook.

There are several ways to adjust an existing universal life policy. Which one fits depends on what you need the coverage to do now, which may be very different from when you bought it.

Replacing does make sense sometimes. If your health is still good and a guaranteed universal life or term life policy gives you the coverage you need for less, we will show you the side-by-side numbers and say so plainly. If you no longer need the coverage at all, we will walk through what surrendering means for taxes and cash value.

• Raise the premium enough to carry the policy to the age you want
• Lower the face amount so the monthly charges shrink
• Switch from an increasing death benefit option to a level one
• Stop or pay back policy loans that are eating into cash value
• Exchange into a different policy only after comparing the full cost

Does buying younger lock in a lower cost?

With guaranteed universal life, yes. You lock in a level premium based on your age when you buy, and as long as you pay on time, coverage stays in place to the age written in the contract. It builds little cash value, but the cost question is settled up front.

With current-assumption or indexed universal life, buying younger helps but locks in nothing. You start with lower charges and more years to build cash value, which gives the policy a cushion for later. The yearly charges still rise with age, so the funding level you choose at the start matters a lot.

For families around Burleson buying coverage in their 30s or 40s, we often lay universal life next to term life and whole life so you can see how each one handles rising costs before you choose.