Cost of Insurance

Cost of Insurance (COI), within the context of an Indexed Universal Life Insurance policy, refers to the portion of the premium that is allocated to cover the mortality risk associated with insuring the policyholder's life.

This cost is determined by factors such as the insured's age, gender, health, and the face amount of the policy. In an IUL policy, the COI is deducted monthly from the policy's cash value. As the policyholder ages, the COI generally increases, reflecting the higher risk of mortality.

It is essential for policyholders to be mindful of the COI as it can impact the growth of the cash value within the policy, which is linked to the performance of a specified index, such as a stock market index.