Guaranteed Universal Life-Pros and Cons

Guaranteed Universal Life-Pros and Cons

February 09, 2016

Guaranteed Universal Life (GUL) also called “No Lapse or “Secondary Guarantee Universal Life” is really a Term life insurance that has a guaranteed level premium and guaranteed death benefit for a limited period. Often times, you will outlive the guaranteed level period and must make a decision to secure a new policy at an older age when your health may not the best.

Whole life insurance provides a guaranteed level premium and guaranteed death benefit beyond age 100, as well as, provide a guaranteed cash value. The whole life insurance policy will have the highest premium because of the existence of guaranteed cash value.

So what if you do not want: guaranteed cash value in the whole life policy, or cannot afford the whole life premiums and dislike term insurance because of the lack of long term guaranteed level premiums? What other options are available? A possible solution is Guaranteed Universal Life insurance.


Here are some of the Pros and Cons of this type of policy.


  1. Premiums can be level for a lifetime. You can select the age they want the death benefit guaranteed to, whether it is age 90, 95, 100, 105, 115 or 121….
  2. The length of premium payments can be structured according to your preferences.
  3. Interest rate volatility does not affect premium payments.
  4. This type of policy is inexpensive as a permanent life insurance policy compared to other policies, as the premium is calculated to maintain a level premium payment until death.
  5. Comparisons of this product among insurance carriers are relatively easy as there are not many components to the plan.
  6. Cash surrender values of permanent products can be transferred to this policy without current income taxation on policy gains by utilizing a Section 1035 Exchange.



  1. This policy may not have any cash value, unlike alternative permanent life insurance products.
  2. Although premiums may be lower than whole life insurance or other permanent insurance products, they will generally be higher than term insurance.
  3. The greatest con of guaranteed universal life is that the timeliness of premium payments is critical to maintaining the guaranteed level premium. Other policies that contain cash value can provide a source within the policy to cover the required premium to maintain the death benefit, however, a missed or late premium payment can jeopardize the guaranteed premium feature resulting in a policy without a guaranteed premium.

According to Bloomberg News, more than 6.6 million Americans over the age of 65 either worked or looked for work in the last year. A staggering number of people in their mid-60s or beyond either haven't retired yet or have returned to the workplace in the last 10 years.

What stands out here is a correlation between "retirees" not retiring, and the rise of guaranteed insurance products, especially guaranteed universal life (UL). As the number of seniors in the workplace has more than doubled, the demand for guaranteed products has boomed.

Guaranteed UL policies continue to increase in popularity and number. Understanding why so many want them -- and will continue to, at least in the near term -- is essential to successfully offer them and effectively serving our clients.