Do you have to put in the maximum every year? Not in an IUL, which means indexed universal life. A viewer raised it after I'd illustrated two IULs for him, the second one designed with extra room for more money. The short version of a video on whether you have to hit the MEC limit every year is no.
The MEC limit is the most you can put into a policy without it becoming a modified endowment contract, or MEC. A MEC loses the tax-free treatment of policy loans and withdrawals, so you want to stay under it. In most IULs, the room under that limit adds up over the years. If your limit is $10,000 a year, by year five you've had room for $50,000. If you've only put in $10,000 by then, you can usually add the other $40,000 in year five.
You don't even have to pay the minimum every year, as long as there's enough cash value to cover the monthly charges. On the max-funded designs I build, someone who hit the MEC limit in year one could probably skip several years and the policy would still be in force. I wouldn't do it. The cost of insurance and the other charges keep coming out every month, and with no new money going in, the cash value isn't growing the way it should. The charges that come out before your index credit lands lists what those are.
The carry-forward is useful for anyone expecting a windfall. If you know an inheritance, a business sale, or a big commission is coming in a few years, the policy can be designed now with a larger death benefit, which builds MEC room every year while you fund it lightly. When the money arrives, it can go in right away. The trade-off is that a larger death benefit costs more in insurance charges while you wait, so it only makes sense when you're confident the money is coming.
Whole life is less forgiving. The base premium is a bill you owe every year, and the paid-up additions rider, the part that takes extra money, often limits when you can add and how much, as covered in how the paid-up additions rider works. Some riders end for good if you skip too many years.
Catching up later is allowed, and it still isn't ideal. The best growth comes from getting money into the policy as early as you can, because every dollar that goes in starts compounding for the rest of your life. If a policy stays underfunded for years, the rising cost of insurance can eventually outrun the cash value, and an underfunded IUL can lapse.
Your carrier's service line can tell you your current room under the MEC limit, in dollars, as of your next policy anniversary, the date each year the policy renews. Write that number in your policy file next to the total you've paid in so far.