Cost of insurance rate is the per-unit pricing factor"often expressed per thousand of net amount at risk"that an insurer applies to calculate COI charges inside universal life and variable universal life policies. Rates vary by age, gender, risk class, and sometimes policy duration, reflecting expected mortality. Policies specify guaranteed maximum COI rates and allow carriers to charge lower, current rates when experience is favorable. Changes in COI rates or application of guaranteed maxima can dramatically affect policy performance, especially in later years.

Advisors encounter cost of insurance rates in detailed policy ledgers and when explaining why a universal life policyTMs required premium has increased. Carriers may adjust current COI rates across blocks of business due to emerging mortality or expense experience, subject to contractual and regulatory limits. Advanced planners and institutional buyers analyze COI rate competitiveness across carriers for large cases. Understanding cost of insurance rates helps advisors interpret carrier communications and model how different COI assumptions influence long-term cash-value and lapse outcomes.