Guaranteed Universal Life Insurance (Definitive Guide)
Posted in Life Insurance last updated on August 31, 2020Guaranteed universal life insurance balances a term policy’s affordability with the comprehensive coverage of a permanent policy. It’s a blend of features that delivers the best parts of both policies.
In this article, we will use the term guaranteed universal life or GUL. Still, there are a few other common names for this type of policy, including:
- Secondary guaranteed universal life
- No lapse life insurance
Quick Links
Use the links in the list below to jump to any section.
- Quick Summary
- Guaranteed Universal Life Explained
- Reasons People Choose GULI
- Pros & Cons
- GULI vs. Term
- GULI vs. Whole Life
- For Seniors
- Best GULI Companies
- Sample Quotes
- How to Apply
- Conclusion
- How Abrams Insurance Solutions Can Help
Quick Summary
Guaranteed universal life provides coverage until you reach a certain age, usually somewhere between 90 and 121. It focuses on death benefits, skipping the bells and whistles to keep the costs as low as possible.
In short, you get coverage for life, but pay much lower rates than other life-long policies.
Guaranteed Universal Life Insurance Explained
Guaranteed universal life combines the length of a permanent policy with the price of a term policy. Before we dive into how this works, we’ll cover the basics.
When you comparison shop for GUL policies, you’ll choose the age you want your coverage to expire. Options range between age 90 and age 121 – much longer than the average lifespan. The longer the coverage, the higher the premiums. Although, in this case, it’s not an enormous difference between a policy that runs to age 95 and one that runs to 121.
While technically a permanent policy, GUL does not include the cash value accumulation that comes with other types. If you’re looking for the cash value, you’ll want to consider whole life, universal life, or indexed universal life.
There are a few insurers that will allow you to add a cash value component. This also opens up more customization options for your policy. An experienced agent can help you decide what type of policy makes the most sense for your family.
GUL policies have fixed premiums and fixed face amounts. As long as you pay your premiums on time, nothing changes. As always, there are a few companies that defy the norm and offer varying premium options, but they’re few and far between.
For the most part, GUL is as straightforward as term life insurance.
Benefits of Guaranteed Universal Life
Unlike term policies, you never need to renew a GUL. It stays in force until you reach the expiration age you chose when applying. The premiums also remain the same for the life of the contract.
There’s no worry about your health as you age, or turning 50 and realizing your new term policy will be 4x the price of your old one.
The low premiums for life-long coverage is the biggest perk. But that all depends on why you’re buying life insurance. If you want something to cover a mortgage, term still makes more sense. However, if you want to make sure that you will leave something behind for a spouse or children, GUL guarantees that there will be something.
Who Gets the Biggest Benefits From Guaranteed Universal Life?
Thrifty people.
Whole life is still the most popular type of life insurance. It’s hard to feel financially responsible while buying something (term insurance) that you most likely won’t use. Even though whole life can cost up to 10x as much as term, people choose it because they’ll use it eventually.
GUL solves the whole life vs. term conundrum. You can follow the advice of the financial gurus. Buy the less expensive option and invest the rest.
People who won’t use their cash value accumulation.
Whole life policies have a cash value accumulation. But most whole life policies grow the cash value at the rate of a cactus – painfully slow. If you end up using your cash value at all, it won’t have the same purchasing power as an indexed universal life, for example.
If you won’t use your cash value, why pay for it?
Reasons People Purchase Guaranteed Universal Policies
GUL works best for someone who needs their life insurance to last for life but isn’t comfortable with the premiums of permanent life insurance.
Guaranteed universal life policies give people that peace of mind – that they aren’t paying for something that’ll just expire in a few decades. It provides a locked-in, tax-free death benefit for your beneficiary or estate.
People use GUL policies for everything from estate planning, buy/sell agreements, charitable trusts, irrevocable life insurance trusts, or leaving gifts for their children.
Pros & Cons
The biggest perks and drawbacks for GUL mainly depend on why you’re looking for life insurance. No matter how good a policy is on paper, if it doesn’t fit your needs, then it’s not right for you.
Pros of a Guaranteed Universal Life Policy
In addition to finding the right life insurance policy for your family’s needs, there are some other perks to choosing a GUL.
- Some insurers offer flexible premiums
- Remarkably low premiums over the age of 75
- Market volatility doesn’t affect premiums
Cons of Guaranteed Universal Life
There is no perfect life insurance product. Some may suit your situation and goals better than others. It’s wise to keep in mind the drawbacks of any policy you’re looking at purchasing.
- Unforgiving premium payment schedule
- Costs more than an equivalent term policy
- Surrender charges if you cancel your policy before the expiration date
- A GUL with a cash value component is expensive
GULI vs. Term Life Insurance
GUL and term policies are remarkably similar. They both aim to fill the same need for a “just in case” policy that most everyone can afford.
They both have:
- Level premiums
- Guaranteed face amount
- No cash value accumulation
- Simple, easy to understand policies
Similarities out of the way, there are a few major differences.
The differences between term policies and GUL show off the advantages of guaranteed universal life.
- Long period of coverage – age 90 to 121
- Slightly more expensive than term because of the extended coverage
- Costs roughly equalize with a term policy around age 50
GULs cover you for life. In comparison, insurers designed term policies for working folks with kids or a mortgage.
A GUL can serve additional needs, like estate planning. You won’t have the frustration of surviving your term with nothing to show for it.
GULI vs. Whole Life
The main difference between guaranteed universal life and whole life insurance is the cash value accumulation. Whole life always comes with a cash value component, which grows over time.
Once you hold your policy for a set number of years, you can borrow against your cash value. The insurance company doesn’t ask why or even care. Families use this for everything from helping their kids pay for college to pay off medical debts to annual vacations.
GULI doesn’t have a cash value. That’s why it’s so much cheaper than whole life insurance.
The similarity between the two is that the policy lasts longer than the average human lifespan.
Guaranteed Universal Life for Seniors
We mentioned earlier that the premiums between term and GUL start to even out around age 50. Perhaps your term life insurance just expired, or you’re looking for a policy for the first time, and new premiums come with a terrible shock.
Once you’re over 50, guaranteed universal life is one of the more affordable policies. Plus, available term limits start decreasing rapidly in your senior years. GUL allows you lifelong coverage at lower premiums.
It’s pretty close to a no-brainer at this point – providing the policy suits your needs.
For Seniors Over 70
It’s tough to get life insurance over 70. From limited benefit periods to stratosphere-high premiums, plus any health issues can make it feel nearly impossible.
Several GUL companies will issue coverage up through age 85. It will help if you have relatively okay health for your age. But it’ll be a more affordable policy than virtually everything else, including guaranteed issue.
Best Guaranteed Universal Life Companies
The following three companies have excellent guaranteed universal life policies. They are a great place to start comparison shopping if this sounds like the right policy type for your family.
American National – Signature Guaranteed UL
American National offers a unique feature in its GUL policy. They include a cashback option if you surrender the policy on particular anniversaries.
You can cancel the policy after 15 years for 50% of your premiums refunded. If you cancel after 20 or 25 years, you can get 100% of your premiums back. You have to use this option within 60-days of the policy anniversary.
Anyone between 18 and 80 years old can apply for a GUL policy. Benefits start at $25,000. They don’t have a listed maximum, so the sky is the limit, providing you can financially qualify.
The other thing our clients appreciate is the express underwriting program. If you’re under 65 and applying for less than $250,000 in benefits, you can skip the medical exam.
Sagicor
Sagicor consistently offers low rates for no-exam life insurance policies. Their GUL is no exception. Other companies may offer no-exam policies for lower benefit policies, usually under a quarter million. Sagicor allows you to go through their accelerated underwriting for up to $400,000 in benefits with their guaranteed universal life policy.
They also have a broader age issue range than other insurers. You can buy a policy for a child as young as 15 days old. They will issue up to age 85.
The benefits available also vary in range. You can go as low as $25,000 or to over $10 million.
The trick with Sagicor is they’re most competitive under $150,000 in benefits, often under $125,000 – depending on age. Other carriers can beat them out in price for higher benefit amounts.
They have also initiated stricter underwriting guidelines in recent years. If you have any health concerns, talk to your agent first to see if it’s one that Sagicor is willing to skip a rating.
Foresters Smart UL
Foresters Financial’s SMART Universal Life has more of the perks you’d expect out of a permanent policy. It has a cash value that grows as it accrues interest.
It also has a certificate’s account value that helps maintain the 10-year no-lapse guarantee. However, some clients see their premiums increase after the first 10-years of holding the policy. Ask your agent about this.
They offer benefits between $50,000 and $1,000,000 to anyone from 15-days-old to 85-years-old.
Guaranteed Universal Life Quotes
To see quotes right now, use the Instant Quotes tool on this page. Under “type of insurance,” choose lifetime and look for any of the policies with GUL in the name.
The charts below compare rates for the top 3 companies we listed previously.
The two charts below show sample, monthly rates for men and women for a guaranteed universal life policy. Rates will differ by state and health.
| Age | $100,000 | $250,000 | $500,000 | $1,000,000 |
|---|---|---|---|---|
| 30 | $43 | $100 | $184 | $333 |
| 40 | $64 | $133 | $251 | $474 |
| 50 | $92 | $202 | $381 | $715 |
| 60 | $143 | $325 | $637 | $1,246 |
| 70 | $256 | $598 | $1,160 | $2,250 |
| Age | $100,000 | $250,000 | $500,000 | $1,000,000 |
|---|---|---|---|---|
| 30 | $37 | $85 | $157 | $289 |
| 40 | $52 | $111 | $245 | $403 |
| 50 | $78 | $171 | $329 | $633 |
| 60 | $125 | $284 | $551 | $1,069 |
| 70 | $218 | $511 | $1,001 | $1,963 |
To get more specific rates, use the Instant Quotes tool on this page to get real, free quotes. Choose “lifetime” from the Type of Insurance drop down box.
How to Apply
Applications for GUL policies work just like any other standard insurance application. You comparison shop policies for pricing and coverage. An independent agent can help you choose between companies if you have a medical condition, so you don’t end up surprised when hearing back on an application.
Virtually all GUL policies require the life insurance medical exam. (Although a few let you skip the exam.) You don’t pay for it. The insurance company covers that.
It takes less than an hour, and the medical examiner can meet you on your schedule wherever it is convenient for you.
Once the medical exam and application are complete, you will wait a few weeks for an underwriter to review and verify the information. Then they’ll send your insurance agents an offer to present to you.
Once you sign the offer, the policy will be in force. You will have coverage so long as you pay your premiums on time.
Conclusion
Guaranteed universal life policies create a tidy solution for families that don’t like the idea of paying for a term policy only to survive it. They last well beyond the average lifespan and offer simple, straightforward life insurance.
If you need coverage longer than a term insurance policy, then a Guaranteed Universal Life insurance policy is the best and least expensive option.
How Abrams Insurance Solutions Can Help
At Abrams Insurance Solutions, we work with over 70 of the top-rated insurers in the country. This lets us compare companies that have better rates for specific jobs or medical conditions. That way, despite what a form tells you, you know that you’re getting the best deal possible.
If you have any questions about guaranteed universal life insurance, give us a call at 858-703-6178. We’re here to help, and there is never any obligation to move forward.
