The cost of insurance (COI) is an integral component of life insurance policies, particularly variable and universal life insurance. COI charges encompass monthly expenses for mortality, administration, and other costs incurred by the life insurance company. These charges are assessed based on the insured's attained age, the original rating class, and the current net amount at risk. In most cases, the COI charges are deducted from premium payments before crediting the policy's accumulation value.

Additionally, the historical cost of insurance charges is used when determining Cost Basis which is important for tax considerations when surrendering or selling a life insurance policy.

Making an Informed Decision: Selling Your Life Insurance Policy

When it comes to selling your life insurance policy, it's essential to ensure you receive the best offer available. However, determining the optimal offer can be challenging. One way to attempt to secure the best offer is to apply to every licensed buyer in your state, which may range from 10 to 35 different companies. However, these direct buyers often prioritize their investors' interests rather than yours.

At Welcome Funds, we have leveled the playing field for policy owners. We simplify the process by conducting an auction with these buyers on your behalf. With just one application to Welcome Funds, you can rest assured that we negotiate to obtain the best life settlement offer for you. This streamlined approach to life settlements sets us apart.

Learn more about selling your life insurance policy

Cost of Insurance on a life insurance policy