Level Cost of Insurance (LCOI)

Level Cost of Insurance (LCOI) is a type of cost structure available in Universal Life Insurance that keeps the cost of insurance fixed and predictable throughout the life of the policy. Under this structure, the cost does not increase as the insured person ages, making it easier to budget over the long term.

Instead of gradually rising premiums like with annually increasing cost structures, LCOI spreads the cost evenly across the policy, typically resulting in higher payments in the early years and lower relative costs in later years.

How LCOI Works
When you choose a Level Cost of Insurance option:

• Your monthly insurance charges are calculated based on your age at the time the policy is issued
• These charges are then locked in and remain level for life (or until a specified age such as 100)
• The insurer sets the rate at issue, based on factors like age, sex, smoking status, and health classification
• The cost is deducted monthly from your policy's investment accounts

Key Benefits of Level Cost of Insurance‍

• Stable pricing: Premiums are consistent over time, making it easier to plan and budget
• Long-term savings: While LCOI starts higher, it can cost less over the full lifetime of the policy compared to rising cost structures
• Suits lifelong coverage needs: Ideal for individuals who want to hold the policy for the long term, including estate planning and permanent insurance needs

Considerations with LCOI

• ‍‍Higher early premiums: The initial cost is higher than other options like annually increasing cost of insurance (YRT)
• Less flexibility in the short term: It may not suit clients with tighter budgets or short-term needs
• Only available with specific payout options: In many cases, Level COI is only available with a Coverage Plus payout, not a Level payout

Who Should Consider LCOI?
LCOI is generally best suited for:

• Clients who want long-term, permanent insurance
• Those who value predictable, stable pricing
• People who want to reduce the risk of rising costs later in life
• Policyowners interested in using the policy for estate planning or legacy purposes

Level COI vs. Annually Increasing COI – Summary Table

Bottom Line:
Level Cost of Insurance (LCOI) provides a stable, predictable structure for people who want permanent life insurance and plan to hold their policy long term. It helps avoid the rising costs of insurance later in life and supports more consistent financial planning, especially for estate preservation and tax-efficient wealth transfer.