The IUL Cash Value Timeline: Year by Year
Written and reviewed by Hans Goldstein, licensed insurance producer, NPN 20602398 · CA Insurance License #4273294Last reviewed · Published October 3, 2026
The curve, with all three columns
| Year (age) | Guaranteed | Midpoint | Current |
|---|---|---|---|
| 1 (45) | 35% | 39% | 42% |
| 5 (49) | 77% | 86% | 95% |
| 10 (54) | 81% | 98% | 117% |
| 15 (59) | 85% | 110% | 142% |
| 20 (64) | 84% | 126% | 189% |
| 25 (69) | 83% | 144% | 251% |
| 30 (74) | 81% | 165% | 333% |
Hypothetical. Not an illustration of any specific policy. Not a quote. A transparent model built for this site, not a carrier illustration. Assumptions: male preferred nonsmoker, $10,000 a year for 15 years, Option B while paying then Option A, premium load 10% (years 1-10) then 5%, $10 monthly fee, a per-$1,000 charge for 10 years, surrender charge grading to zero by year 15. Current = 6.0% crediting (near the AG 49-A maximum) and current COI at 80% of 2017 CSO select rates; guaranteed = 0% crediting and maximum COI at 100% of 2017 CSO ultimate rates; midpoint = 3% crediting and COI halfway between. Real policies differ. Past index performance is not indicative of future results. Ask for an in-force or new-business illustration from the insurer, which shows the guaranteed column first.
AI voices. Education, not tax or legal advice. Hans is paid a commission if you buy a policy through him. Comment FUNDED on the video for the checklist.
What happens in each phase
Inside an IUL's cash value over time
| Policy years | What dominates | What you see |
|---|---|---|
| 1 to 3 | Premium loads, per-$1,000 charges, surrender charges | Surrender value well below premiums paid; sometimes near zero |
| 4 to 10 | Charges ease; crediting starts to matter | Surrender value climbs toward premiums paid |
| 10 to 15 | Surrender charges grade to zero | Surrender value catches up with account value |
| 15+ | Compounding on a larger balance; cost of insurance rising with age | The upward bend on illustrated columns; flat or falling on guaranteed |
Is your cash value on track?
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Where your premium goes
In this model a male 45 paying $10,000 a year loses about 15% of the first 10 years of premium to charges when the policy is max-funded, and about 22% when the same premium buys three times the death benefit. The surrender charge is extra: in year 1 the cash surrender value is about $4,245 of $10,000 (max-funded) and $0 (target-funded), which is why early cash value can feel like half the premium disappeared. A common rule of thumb is that roughly half of early premium goes to charges; in this model that is close for year-one surrender value, and too high for the ongoing charges in a well-funded design.
| First 10 years | Premium load | Fees | Cost of insurance | To cash value |
|---|---|---|---|---|
| Max-funded | $10,000 | $3,700 | $1,240 | $85,060 |
| Target-funded | $10,000 | $8,710 | $3,721 | $77,569 |
Hypothetical. Not an illustration of any specific policy. Not a quote. Model on current (non-guaranteed) charges: premium load 10% (years 1-10) then 5%, $10 a month fee, per-$1,000 charge for 10 years, current COI at 80% of 2017 CSO select rates, 6% illustrated crediting. Guaranteed maximum charges are higher. Ask your insurer for the policy's actual charge schedule.
The cost of insurance ladder
Read it like a ladder. The insurance part of the policy gets more expensive every year: the guaranteed maximum rate is about $8 per $1,000 at 65, $24 at 75 and $82 at 85 (2017 CSO). Each step is small until the late 70s, then the ladder curves up sharply. In a well-funded policy the cash value grows faster than the charges, so the policy carries itself with no extra premium (green). In an underfunded policy the charges eat the cash value from the inside, and the owner must pay more or the policy lapses (red, at 79 here). Real results usually land between those lines, which is why an in-force illustration every few years matters.
Hypothetical. Not an illustration of any specific policy. Not a quote. Male 45, preferred nonsmoker. Charges per the stated model; COI is charged on the net amount at risk (death benefit minus cash value), so the dollar cost depends on both the rate and how much coverage the cash value has not yet replaced. Source for rates: Society of Actuaries, 2017 CSO table 3291.
What makes it faster or slower
- Funding level. Premium close to the tax-law limit for the death benefit builds fastest; a large, thin policy may never break even. Max-funded IUL.
- Death benefit option. Option B early, switched to Option A later, lowers cost of insurance as cash grows (Option B to A).
- Age and class. Older or rated insureds pay more cost of insurance, slowing the curve.
- Crediting. Caps and participation are not guaranteed; the midpoint column is a sober plan.
- Loans and withdrawals. Taking money early resets the curve.
Reading your own timeline
Your annual statement shows account value and surrender value; the gap between them is the surrender charge. Plot those two lines against total premiums paid each year. If the policy is past year 10 and surrender value is still well below premiums paid on a well-funded design, ask why. Read an in-force illustration.
Send the statement or letter. Get a plain answer.
Within one business day you get a written read: what the letter or statement means for your policy, the options, and the one to take first. No pressure to change anything.
Rather talk it through? Or book 15 minutes on Hans’s calendar, or call 213-414-2808.
Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer
Frequently asked questions
Sources
- Society of Actuaries, 2017 Loaded CSO, Nonsmoker Male ANB (table 3291)
- NAIC Actuarial Guideline 49-A (IUL illustrations)
- 26 U.S.C. §7702A (modified endowment contracts), Cornell LII
Hans Goldstein, CA Insurance License #4273294 · NPN 20602398 · Goldstein & Co. LLC dba Goldstein Insurance Services, CA License #6016830
Contact: hans@hansgoldstein.com · 213-414-2808
General education, not tax or legal advice. Tax treatment depends on your facts and on current law, which can change. Talk to your CPA or estate attorney. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Guarantees apply only to the contractual terms of the policy. Caps, participation rates, loan rates, charges and dividends are not guaranteed and can change. Hypothetical. Not an illustration of any specific policy. Not a quote. Illustrated (current) values are not guaranteed; the guaranteed column is the only promise in a policy. Hans is paid a commission by the insurer if you buy a policy through him. For life insurance, ask and he will tell you what he earns on your specific policy. Product and company names are trademarks of their owners. Goldstein Insurance Services is an independent agency, not affiliated with or endorsed by any insurer named here. Life insurance requires underwriting; not everyone qualifies. This page describes products in general terms; read the policy and the insurer's disclosures before you buy.