A high cash value whole life policy is usually built as a blend. There's a small base policy, a paid-up additions rider, and a layer of term insurance. Paid-up additions, or PUAs, are extra premium dollars that buy small pieces of fully paid-up insurance, and most of each dollar shows up as cash value right away. In a 90/10 design, about 90% of what you put in goes to PUAs and about 10% goes to the base. An 80/20 design splits it 80 and 20.
The term insurance has a specific job. Tax rules cap how much money a policy can take compared with its death benefit. Go over that cap and the policy becomes a modified endowment contract, or MEC, which means loans and withdrawals lose their tax-free treatment. The term layer adds cheap death benefit, and that extra death benefit is what gives the policy room for big PUA payments without becoming a MEC. Why a high cash value policy often has term insurance inside it covers the blend itself.
On many whole life designs, every PUA payment buys a little paid-up insurance, and that paid-up insurance replaces some of the term. Year after year, the term shrinks. When it's gone, or burned off, your ability to put in that big 80% or 90% goes with it. From then on, you're limited to the base premium plus a little more.
That isn't a flaw. It's a design choice, and it should be your choice. Some people want to fund hard for about seven years and then drop down to the base. For them, we set up the blend so the term runs out right around year eight, and they're happy paying the small base premium after that. Other people want to keep putting in large amounts for as long as they can. For them, we adjust the blend so the term lasts longer, which can mean carrying more insurance and paying for it. This limit, and the level term question below, are the subject of a short video on what changes when the term burns off.
Carriers build the term layer in two ways. Some use annual renewable term, which means term insurance priced one year at a time. It starts cheap, the price per dollar of coverage rises each year, and your PUAs replace it as you go. Other carriers require a level term rider for 10, 15, or 20 years, which costs the same every year and doesn't shrink during its term. Which one you get is mostly the carrier's decision. If you keep a level term rider for its full length, its total cost tends to come out a little lower. Annual renewable term costs less up front, so more of your money compounds early. My guess is the two end up close to even over the long run, so if your carrier offers a choice, ask to see both.
Your dividends can move the date too. If your dividends buy paid-up additions, they replace term faster, and since dividends aren't guaranteed, the exact year the term runs out can shift. Illustrations are projections, not promises.
This is a whole life issue. An IUL, which means indexed universal life, charges for its insurance month by month out of the account value, so it doesn't have a burn-off point that shuts off extra premium in the same way. Its limit is set by the death benefit and the MEC rules, which the MEC line explains.
If you already own a blended whole life policy, call the carrier and ask two questions. How much term coverage is left on the policy today, and at the current dividend scale, which means the dividend rate the carrier is paying right now, in which policy year does it reach zero? Plan any large PUA payments you still want to make before that year.