Cash Value Life Insurance Growth Calculator

Estimate how the cash value of a permanent life insurance policy grows over time, factoring in annual premiums, cost of insurance (COI) deductions, credited interest rate, and surrender charges.

Typical range: 0.1% – 2% of death benefit per year depending on age/health.
Whole life: ~3–5%; Universal life: varies. Check your policy illustration.
Flat annual fee deducted from cash value (policy fees, admin charges).
Number of years during which a surrender charge applies if you cancel the policy.
Percentage of cash value charged upon surrender in year 1; declines linearly to 0% by end of surrender period.

Formulas Used

Annual Cost of Insurance (COI):
COI = COI Rate × Death Benefit

Net Addition to Cash Value:
Net Addition = Annual Premium − COI − Annual Expense Charge

Interest Credited (end of year):
Interest = (Beginning Cash Value + Net Addition) × Credited Interest Rate

End-of-Year Cash Value:
CVn = CVn−1 + Net Addition + Interest  (floor: $0)

Surrender Charge Percentage (linear decline):
SC% = Initial Surrender Rate × (Surrender Period − Year + 1) / Surrender Period  (0 after surrender period)

Surrender Value:
Surrender Value = CVn × (1 − SC%)

Net Gain / (Loss):
Net Gain = Cash Value − Cumulative Premiums Paid

Return on Premiums:
ROI = Net Gain / Total Premiums Paid × 100%

Assumptions & References

  • Premiums are paid at the beginning of each year; interest is credited at end of year.
  • The Cost of Insurance (COI) is modeled as a flat annual percentage of the death benefit. In real policies, COI increases with age and is deducted monthly. Consult your policy illustration for exact figures.
  • The credited interest rate is assumed constant. Whole life policies credit a declared dividend rate (~3–5%); universal life policies credit a current rate that can change annually.
  • The surrender charge declines linearly from the initial rate in year 1 to 0% at the end of the surrender period — a common industry structure (NAIC model regulation).
  • Cash value is floored at $0. If charges exceed growth, the policy may lapse; a real policy would require additional premium to keep it in force.
  • This calculator does not model policy loans, dividends, paid-up additions, or tax treatment. Consult a licensed insurance professional for a personalized illustration.
  • References: NAIC Life Insurance Buyer's Guide; IRS Publication 525 (taxable vs. non-taxable income); ACLI Life Insurers Fact Book.

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