Use this calculator to estimate the potential cash value growth and death benefit of a Universal Life (UL) insurance policy over time. Universal Life policies offer flexible premiums and a cash value component that grows based on an assumed interest rate, minus policy fees and the cost of insurance (COI).
Please note: This is a simplified projection. Actual policy performance can vary significantly based on the specific insurer, policy terms, actual interest rates, and changes in the cost of insurance. This calculator assumes a level death benefit and does not account for withdrawals, loans, or premium holidays.
Understanding Universal Life Insurance
Universal Life (UL) insurance is a type of permanent life insurance that offers both a death benefit and a cash value component. Unlike Whole Life insurance, UL policies provide more flexibility regarding premium payments and death benefit amounts, allowing policyholders to adjust them over time within certain limits.
Key Components of a Universal Life Policy:
Death Benefit: This is the amount paid to your beneficiaries upon your death. UL policies often allow you to choose between a level death benefit or one that increases with the cash value. This calculator assumes a level death benefit.
Cash Value: A portion of your premium payments, after deducting policy fees and the cost of insurance, is allocated to a cash value account. This account grows on a tax-deferred basis, earning interest at a rate declared by the insurer. The cash value can be accessed through loans or withdrawals.
Premiums: UL policies offer flexible premiums. You can pay more than the minimum required to build cash value faster, or pay less (even skip payments) if the cash value is sufficient to cover the policy's costs.
Cost of Insurance (COI): This is the actual cost of providing the death benefit. The COI is deducted from your cash value each month and typically increases as you age. It's influenced by factors like your age, health, gender, and the death benefit amount.
Policy Fees: These are administrative charges deducted from your cash value, often on a monthly or annual basis. They cover the insurer's operational costs.
Interest Rate: The rate at which your cash value grows. This rate is declared by the insurance company and can fluctuate, though many policies offer a guaranteed minimum interest rate.
How the Calculator Works:
This calculator projects the potential growth of your Universal Life policy's cash value and illustrates the death benefit over a period of up to 60 years or until age 95. It takes into account your annual premium, policy fees, an assumed interest rate, and a simplified model for the cost of insurance (COI).
Each year, the calculator performs the following steps:
Adds the annual premium to the current cash value.
Subtracts the annual policy fees.
Calculates and subtracts the Cost of Insurance (COI) for that year. The COI is based on your death benefit and an increasing COI rate per $1,000 of coverage.
Applies the assumed annual interest rate to the remaining cash value.
Updates the COI rate for the next year based on the specified annual increase percentage.
Important Considerations:
Estimates Only: The results are projections based on the inputs you provide and simplified assumptions. Actual policy performance can differ.
COI Simplification: The calculator uses a simplified COI model. In reality, COI schedules are complex and vary significantly by insurer and individual factors.
No Loans/Withdrawals: This calculator does not account for any loans or withdrawals taken from the cash value, which would reduce its growth.
Lapse Risk: If the cash value becomes insufficient to cover the policy's costs (COI and fees), the policy may lapse. This calculator will show negative cash values if this occurs, indicating a potential lapse.
Tax Implications: While cash value growth is generally tax-deferred, withdrawals and loans can have tax implications. Consult a financial advisor for personalized advice.
This tool is designed to provide a general understanding of how a Universal Life policy might perform under specific assumptions. For precise figures and personalized illustrations, always consult with a licensed insurance agent or financial advisor.
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function calculateULPolicy() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var deathBenefit = parseFloat(document.getElementById("deathBenefit").value);
var annualPremium = parseFloat(document.getElementById("annualPremium").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var annualPolicyFees = parseFloat(document.getElementById("annualPolicyFees").value);
var startingCOIper1000 = parseFloat(document.getElementById("startingCOIper1000").value);
var annualCOIIncreasePercent = parseFloat(document.getElementById("annualCOIIncreasePercent").value);
var resultsDiv = document.getElementById("ulResults");
resultsDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(currentAge) || isNaN(deathBenefit) || isNaN(annualPremium) || isNaN(interestRate) || isNaN(annualPolicyFees) || isNaN(startingCOIper1000) || isNaN(annualCOIIncreasePercent) ||
currentAge <= 0 || deathBenefit <= 0 || annualPremium <= 0 || interestRate < 0 || annualPolicyFees < 0 || startingCOIper1000 <= 0 || annualCOIIncreasePercent < 0) {
resultsDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var cashValue = 0;
var currentCOIrate = startingCOIper1000; // COI per $1,000 of death benefit
var projectionYears = 60; // Project for up to 60 years
var maxAge = 95; // Stop projection at this age
var results = [];
results.push({ year: 0, age: currentAge, cashValue: 0, deathBenefit: deathBenefit }); // Initial state
for (var i = 1; i maxAge) {
break; // Stop if age exceeds maxAge
}
// 1. Add premium
cashValue += annualPremium;
// 2. Subtract policy fees
cashValue -= annualPolicyFees;
// 3. Calculate and subtract Cost of Insurance (COI)
var coiForYear = (deathBenefit / 1000) * currentCOIrate;
cashValue -= coiForYear;
// 4. Apply interest (only if cash value is positive)
if (cashValue > 0) {
cashValue *= (1 + (interestRate / 100));
} else {
// If cash value goes negative, policy might lapse.
// For this calculator, we'll just show it going negative.
// In reality, the policy would likely lapse unless more premiums are paid.
}
// 5. Update COI rate for the next year
currentCOIrate *= (1 + (annualCOIIncreasePercent / 100));
// Store results for display (e.g., every 5 years or specific milestones)
if (i === 1 || i === 5 || i === 10 || i === 15 || i === 20 || i === 25 || i === 30 || i === 35 || i === 40 || i === 45 || i === 50 || i === 55 || i === 60 || age === maxAge) {
results.push({ year: i, age: age, cashValue: cashValue, deathBenefit: deathBenefit });
}
}
// Display results
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