Guaranteed Universal Life Insurance (GUL) is a type of permanent life insurance that provides a guaranteed lifelong death benefit, for a guaranteed premium. Guaranteed Universal Life insurance is a policy without a cash value, and may feature lower premiums than some permanent life insurance alternatives and higher premiums than others. In this article, we will discuss what Guaranteed Universal Life insurance is and how it works.
If you would like help determining if this or another life insurance solution is right for you White Swan would be happy to help.
This article is written as general education, and should not be considered as personal financial advice. If you would like personal guidance with life insurance, you can schedule a time to talk with one of our experts.
What is Guaranteed Universal Life Insurance?
Guaranteed Universal Life insurance is a type of permanent life insurance that provides a guaranteed death benefit to beneficiaries. It is often referred to as a "permanent term".
Like term insurance GUL insurance offers a death benefit if the insured passes away but unlike term insurance, GUL insurance provides coverage for the insured’s entire life.
How Does Guaranteed Universal Life Insurance Work?
GUL insurance provides policyholders with a death benefit which is guaranteed to pay out to their beneficiaries upon death. Policyowners pay a premium that can be paid for a limited period of time or during the whole life of the insured person.
The death benefit is typically a level death benefit, meaning that it remains the same throughout the life of the policy. However, some GUL policies offer the option to increase the death benefit for an additional premium.
The premiums for GUL insurance are typically higher than term insurance and IUL insurance but lower than whole life insurance. This is because GUL insurance offers a guaranteed death benefit for the insured’s entire life versus term but does not accumulate a cash value like whole life insurance, indexed universal life insurance, and variable life insurance.
Advantages of Guaranteed Universal Life Insurance
There are several advantages to purchasing GUL insurance, including:
1. Guaranteed Death Benefit: GUL insurance provides a guaranteed death benefit to beneficiaries, regardless of when the insured dies, as long as the on the policyholder pays the required premium to keep the policy in force.
2. Flexible Premium Period: GUL insurance offers flexible premium durations that can be fixed for a period of time or the life of the contract.
3. Lifetime Coverage: GUL insurance covers the insured’s entire life as long as premiums are paid or there is enough cash value to cover the monthly charges and expenses.
Disadvantages of Guaranteed Universal Life Insurance
There are also some disadvantages to purchasing GUL insurance, including:
1. Higher Premiums: GUL insurance premiums are typically higher than term insurance premiums.
2. Lower Cash Value: GUL insurance generally does not accumulate cash value, but may have a limited return of premium option.
3. Limited Investment Options: GUL insurance policies do not have investment options.
4. No Dividends: GUL insurance does not pay dividends.
Who Should Consider Guaranteed Universal Life Insurance?
GUL insurance is a good option for people who want lifelong coverage with a guaranteed death benefit. GUL insurance is also a good option for people who want to pay final expenses, debts, replace income or pay estate taxes, fund a trust or leave a legacy.
To Sum Up
Guaranteed Universal Life Insurance is a great option for many people looking to provide their loved ones with financial protection and peace of mind. This type of insurance can benefit those seeking a permanent life insurance policy for protection rather than accumulation purposes, and boasts a guaranteed death benefit.
While the cost of Guaranteed Universal Life Insurance premiums can be higher than term life insurance, its benefits and security can be well worth the investment. Additionally, new iterations of policies that build cash value can be designed to provide the same guarantees of a GUL insurance policy, with additional benefits.
Do you need guaranteed universal life insurance? White Swan is to help you with all your life insurance needs.