Choosing a life insurance policy can feel overwhelming. Sometimes, deciding between affordable term life insurance policies with temporary coverage and more expensive whole life policies that last a lifetime is challenging. Guaranteed universal life insurance (GUL) can strike a balance between these policies by providing long-lasting, affordable coverage.

Read on to learn how guaranteed universal life insurance compares to more common policy types.

What is guaranteed universal life insurance?

Guaranteed universal life insurance is a flexible, affordable life insurance policy that offers virtually lifelong coverage at a relatively low cost. GUL policies usually mature (or expire) when the policyholder is between 95 and 121, longer than the average life expectancy; therefore, they’re considered permanent. However, GUL differs from other permanent life insurance because policies don’t accumulate much cash value. Likewise, unlike other universal policies, GUL has level premiums and a guaranteed death benefit. Market changes can’t drastically increase premiums or diminish coverage.

It’s important to note that, unlike guaranteed issue life insurance, guaranteed universal life policies don’t guarantee approval. Applicants may still need to complete a medical exam and meet specific requirements to qualify.

How does guaranteed universal life insurance work?

When you apply for guaranteed universal life insurance, you determine the age at which your policy matures. Your policy remains active until you reach that age or pass away, as long as you pay premiums. Most people choose a very advanced age that they don’t anticipate outliving; however, policies that expire at higher ages cost more in premiums. Despite this, GUL policies usually cost less than whole life and other permanent policies, as they accrue negligible cash value in comparison.

When you pass away, your beneficiary receives a death benefit. The death benefit may increase slightly based on market performance, but GUL offers a guaranteed minimum amount you can choose based on your family’s needs. That way, you can take solace in knowing your loved ones will have the funds they need if you pass away, regardless of external economic factors.

Similar to many term and permanent policies, applying for a GUL policy usually requires a medical exam. If you’re uncomfortable taking an exam, plenty of no-exam life insurance options are available.

What are the pros and cons of guaranteed universal life?

Guaranteed universal life insurance is a unique type of policy that combines features of both term and whole life insurance. Nevertheless, it comes with some disadvantages and may not fit everyone’s needs. Weighing the pros and cons can help you decide if GUL is right for you.

Pros of Guaranteed Universal Life

• Flexibility. With a GUL policy, you can adjust your coverage amount as your needs change. Plus, some insurers offer a return-of-premium rider for GUL policies, allowing you to collect a refund on premiums if you cancel your life insurance after a designated time period.
• Affordable lifelong coverage. People often face cost barriers to permanent life insurance. Guaranteed universal life insurance usually offers significantly lower premiums than whole life insurance or other permanent policies with more significant cash value components.
• Simplicity. Guaranteed universal life policies offer level premiums and stable death benefits. That means you don’t necessarily have to invest much time or resources to maintain your GUL policy. As long as you pay premiums, you can count on coverage.

Cons of Guaranteed Universal Life

• Requires a medical exam. Most guaranteed universal life policies have fairly substantial applications. Applicants may have to complete medical exams to demonstrate that they’re in good health and, therefore, a lower risk for insurers. Individuals with complex or terminal health issues may not qualify for GUL coverage.
• More expensive than term life. While guaranteed universal life offers relatively affordable permanent coverage, term life insurance usually costs less. Many adults find that term life insurance provides ample coverage with a more manageable price tag.
• Minimal cash value. Whole and universal life insurance policies can accumulate substantial cash value over time. On the other hand, guaranteed universal life insurance accrues very little cash value. While GUL policies may provide affordable permanent coverage, they’re not effective investment tools.

Who should consider GUL?

Anyone looking for lasting coverage may consider a guaranteed universal life policy alongside other permanent life insurance options. GUL could be a good fit for anyone needing lifelong coverage that’s not concerned about the cash value component of most permanent life insurance policies.

For example, if loved ones, like aging parents or children with special needs, will depend on your income indefinitely, a GUL policy can help you ensure they’ll have the financial support they need if you pass away.

Likewise, if you know estate tax may impact your loved ones’ inheritance or that you’ll leave behind an inheritable debt, a GUL policy can help you cover that amount without dipping into your estate.

Is guaranteed universal life insurance a good option for seniors?

Older adults may sometimes have difficulty finding affordable life insurance that meets their needs. As you age, life insurance becomes more expensive, and you may have fewer options. While term life insurance typically offers the most affordable premiums, older adults may not qualify. Each insurer has different requirements, but normally, people can be eligible for GUL into their 80s and secure coverage for the rest of their lives at a lower cost than other permanent policies.

Older adults may consider guaranteed universal life insurance for seniors. However, plenty of alternatives to GUL exist for older adults, depending on their circumstances and needs.

Fidelity Life offers a suite of life insurance products specifically for older adults. Seniors looking for affordable term life coverage might be interested in a 10-year, 20-year, or 30-year RAPIDecision® Senior Life Term policy. On the other hand, permanent life insurance coverage offerings include RAPIDecision® Senior Whole Life insurance or RAPIDecision® Final Expense for end-of-life coverage. Finally, older adults who don’t qualify for GUL due to health issues may want to apply for RAPIDecision® Guaranteed Issue, which has no medical requirements.

Find life insurance that works for you with Fidelity Life

Guaranteed universal life insurance offers flexible, affordable permanent coverage. However, it’s just one of many possible life insurance policies to consider as you evaluate your coverage needs. The right policy for you provides your loved ones with a financial safety net and gives you peace of mind without breaking your budget. For help navigating your life insurance options, you can call Fidelity Life today to speak with a trusted licensed insurance agent or go online for a quote.

FAQs about guaranteed universal life insurance

What’s the difference between universal life and guaranteed universal life?

While universal life has fluctuating premiums and a changing death benefit, guaranteed universal life has level premiums and a fixed minimum death benefit. However, universal life tends to accrue much more cash value, depending on market behaviors; in some cases, guaranteed universal life doesn’t accumulate any cash value at all.

Do all insurers offer guaranteed universal life?

Not all insurers offer guaranteed universal life. You can learn what policies each insurer provides by speaking with a licensed life insurance agent.

How much does guaranteed universal life insurance cost?

In most cases, guaranteed universal life policies cost less than other permanent policies, like whole life. However, term life insurance policies are usually more affordable than guaranteed universal life. You can confirm costs by speaking with a licensed life insurance agent.