What Is Guaranteed Universal Life Insurance

May 14, 2018

 
 

There are different types of life insurance. Even though many people would prefer to buy a whole life insurance cover they find it too expensive, while term life insurance might sound like the perfect solution, most people are concerned that they would outlive the policy and be left without coverage later in life.

This is where guaranteed universal life insurance comes in. GUL is made to last your whole life. It also comes with some benefits such as it does not have the expensive management fees that are characteristic of whole life insurance. The insured is also able to keep their monthly payments low.

If you are above the age of 60 you will be pleased to know that guaranteed universal life can be cheaper than a similar term life policy.

Some of the benefits of guaranteed universal life include:

  • Cost of insurance does not change even as your health changes and as you get older
  • Just like with a term life insurance, you only pay for the life protection as your coverage is not tied to an investment
  • You do not sink in your money into the policy and instead you can pay down your mortgage as well as put money into your savings
  • You pay less upfront compared to non-guaranteed universal life
  • Unlike with other life insurance policies you do not run the risk of losing coverage from unfavorable investments

It wouldn’t be justice for us to talk about guaranteed universal life without talking about non-guaranteed universal life insurance. So, what is it?

It is a just like the guaranteed universal life policy but it comes attached with an investment option.

Non-Guaranteed Universal Life Insurance

Before you jump at the opportunity to invest with a non-guaranteed universal life insurance policy, consider the following:

  • If you withdraw money from your ‘cash accumulating policy’ the insurance company will give it to you as a loan and the death benefit from your insurance cover will be reduced. This will not let up until you pay back the entire loan amount with interest. In the event that you do not pay back the loan, you end up losing your coverage.
  • In case you die before taking out the ‘cash value’ of your policy, the money does not go to your beneficiaries instead the insurance companies get to keep it.
  • When you withdraw cash from a Non-GUL you have to pay a big fee quite similar to a loan origination fee. There are some companies that charge more than $500 for this service.

It goes without saying that when confronted with a choice between a Guaranteed Universal Life policy and a non-Guaranteed Universal Life insurance cover, the former is the better option as it is not only cheaper but does not rely on how the market performs as it is not an investment.

If you would like to know more about the different types of a Guaranteed Life Insurance cover contact Compare A Quote. We will help you find the best

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