A guaranteed universal life insurance (GUL) policy is an extended form of term life insurance policy. A term insurance policy ceases to protect your financial interest once the term or ‘contract years’ is gone. Typically, the protection extends up to 30 years. But if you cater to worries beyond the contract years and wish for protection for still LONGER time for your family for cheap costs, probably the best choice for you is Guaranteed Universal Life Insurance.
A Blend of Permanent and Term
A permanent or whole life insurance plan is a till-death policy. That means it remains in force till the insured passes off, leaving the beneficiaries the coverage as stated in the policy. It also has the maturity age aspect and it varies between 100 and 121 years of age of the policyholder.
On the other hand, a term insurance maximally covers you for 30 years. We say maximally because few companies offer 40 years term life insurance products. Some companies, for example, New York Life Insurance Co., do not go beyond 20 years term protection.
Both term and whole insurance have their shortfalls for some buyers. Whole insurance can be extremely expensive (compared to term) for most people. On the other hand, the span of protection that term insurance offers may fall short of your expectation.
This is wherein Guaranteed Universal Life Insurance comes up. You choose to get the protection of whole insurance through GUL in exchange of insurance premiums that are almost equal to the cost of term insurance.
Difference between Term and GUL
A typical term insurance remains effective for the certain years you choose the policy for. It is the duration that matters here. So, if you buy a 15 years term insurance policy, you are protected for those 15 years, no matter how old you are. Anything happening (you know what we mean) to you within the time will entitle your policy beneficiaries to the coverage.
In an opposite way, a guaranteed universal life insurance policy lets you choose protection for up to an age you choose. Instead of duration, it is up to an age that your protection lasts. Usually, you may choose between 90th and 121st years of age till when you will be protected. The policy converts if you pass on inside the age.
Difference between Whole and GUL Insurance
As Guaranteed Universal Life Insurance protects you maximally up to age 121, you might tend to mix GUL with whole insurance. The fact is GUL is only an extensive form of term life insurance. It lacks in the investment or cash value feature that whole life insurance policies are noted for.
Advantages of Guaranteed Universal Life Insurance
There are solid good reasons guaranteed universal life insurance is worth opting out.
First, GUL literally guarantees (mark the name ‘guaranteed’) protection for your life time. The policy guaranteedly converts at your death within the specified age.
Secondly, GUL is within your reach in terms of expenses. Compared to whole life insurance, you can buy it, so to say, for a song. But let’s not forget to remember that the cost of GUL insurance should be a little bit higher than a term insurance plan.
Thirdly, unlike what happens in term insurance once the level period is over, your cost of insurance does not rise. Your premiums remain the same throughout.
Lastly, unlike traditional term life insurance, GUL often lets you surrender the policy. If you are unable or unwilling to continue the policy for some reason, you may surrender it for up to 100% cash back. However, you need to continue the policy for a minimum period of 10 or 15 years for that. And, as to what percentage of money you will get back depends on how long you have paid the premiums for. It surely is a good feature of the policy.
Remember what Warren Buffet says, price is what you pay, value is what you get? We think guaranteed universal life insurance is a true consumer-friendly innovation for which insurers deserve praise. Through this product, they have honestly wanted to provide you the very substitute you would need for whole life insurance and it pays you the value you deserve.
Disclaimer: Life Insurance Mentors is not affiliated to any life insurance companies or agencies whatever.