Guaranteed Universal Life Insurance
What is a Guaranteed Universal Life Insurance Policy?
A Guaranteed Universal Life insurance policy is much different than most other life insurance policies like; Term, Traditional Whole Life, or even Indexed Universal Life. Guaranteed Universal Life policies often are called a “No Lapse” policy. Premiums are level and the benefit can be guaranteed to a specified age such as; 90, 95, 100, 105 or even 121. The rates or premiums are far cheaper than those of Traditional Whole Life. But, are more expensive than Term Life policies.
Premium rates are locked in for life. Benefit will never decrease.
Premiums are not tied to the volatility of the stock markets. Unlike an Indexed Universal Life policy or a Traditional Whole Life policy, a Guaranteed Universal Life policy will accrue no cash value. And you won’t have to constantly dump more money into the policy because the cost of insurance went up because of an increase in age. Your rate is locked in from the time you purchased the policy. Your premium rate will never increase and the benefit will never decrease because of age or health conditions.
Policy will never cancel!
As long as the premiums are paid on time, the policy will remain in force. Since the policy does not accrue any cash value. You must make sure to stay current on every premium payment.
A Guaranteed Universal Life Insurance Policy can be exchanged into another type.
Like most insurance policies, a Guaranteed Universal Life policy can be converted into another type of insurance policy. This is called a 1035 Exchange. This is an IRS tax code that allows an old policy to be replaced by a new policy.
There are riders that can be attached to a policy. Some are with an additional cost and some are not.
Riders such as;
Accidental Death Benefit-Beneficiaries receive an additional amount added to the death benefit if the insured dies as a result of an accident.
Guaranteed Insurability Rider-Allows for the insured or policy owner to increase the death benefit in the future regardless of health.
Accelerated Death Benefit-If the insured is diagnosed with a chronic or terminal, illness or condition, the insured may request up to 80% of the death benefit to pay for medical expenses. Some insurance companies may include a critical illness or condition to this benefit as well.
Some companies allow for the insured to make adjustments to the policy later on in life.
Such as;
Short pay-Make larger premium payments at the beginning of the policy, so the premiums will be cheaper later in life.
Reduce coverage-The insured can lower the covered age or death benefit to lower the premium cost.
Dump in-Make a large payment into the policy to reduce the premium needed to make the guarantee.
Who could benefit from having a policy like this?
A Guaranteed Universal Life policy is a best fit for those who can’t afford the premiums of a Traditional Whole Life policy. And those who don’t want to be burdened with an overly complex policy such as an Indexed Universal Life policy. But only those who can afford to pay a little extra each month to guarantee coverage for the rest of their lives.
Just ask yourself these questions, regarding life insurance.
Who pays the bill when I die?
Who will be affected when I die?
© 2018 Travis Helmboldt
