A reader asked how to stop funding an IUL after age 65, and how to turn off the expenses after that. An IUL is indexed universal life insurance, which means the cash value grows with a stock index and the premium is flexible. A video on how to stop funding an IUL and switch off the expenses covers the same ground on camera.
Flexible is the word that matters. Past whatever minimum the policy asks for at the start, you aren't required to pay in any given year. The carrier checks one thing: is there enough cash value to cover this year's expenses? It doesn't care whether the money came from a new payment or from growth. If you funded the policy heavily early on and it was designed with low expenses, there may be enough cash inside to carry it for decades without another payment. Whether that's true for your policy comes down to the numbers.
Ask for an in-force illustration to find out. That's a projection run on the policy as it stands today, using today's cash value, and it shows whether the cash covers the charges if you stop paying in. A projection isn't a promise, so ask for a version at a lower crediting rate too.
Expenses rise after 65. The main charge is the cost of insurance, which is priced on the odds that you'll die that year, so it goes up every year you get older. By then it's usually the only expense left in the policy, and it climbs faster each year.
There is a way to turn the expenses off. With the overloan protection rider, you borrow out nearly all of the cash value, generally 95% to 98%, and then trigger the rider. The carrier keeps a small death benefit in place so the policy doesn't lapse, and the charges stop. I covered how it works in the rider that keeps a loaned-up policy from lapsing. Most IULs allow it after age 75, and at least one allows it after 65. The trade-off is that you can't borrow more once it's triggered, because you've already borrowed it all. You use it when you plan to walk away from the policy, and I wouldn't expect to need it unless you've accidentally borrowed too much.
Why borrow instead of withdraw? If you pull everything out as a withdrawal, the policy closes and you pay income tax rates on the gains. A loan isn't taxed as income while the policy stays in force, but it does reduce the cash value and death benefit while it's outstanding. I'm a broker and not a CPA, so have your tax preparer confirm how this plays out on your return.
Before you stop paying, ask your carrier for the in-force illustration and read the year the cash value runs out at a low crediting rate.