Universal Life Insurance: Term End, Now What?

Term life insurance is a type of insurance that covers the policyholder for a specific period, such as 10 or 20 years. When this period ends, the policy terminates and the policyholder is no longer covered. However, there are several options available to extend coverage past the expiry date. This article will explore these options and discuss what happens when term life insurance ends.

Guaranteed universal life insurance (GUL) is a type of permanent insurance offering lifelong coverage

Guaranteed Universal Life Insurance (GUL)

GUL offers a guaranteed death benefit and fixed premiums that are often more affordable than other types of permanent life insurance. While a GUL policy might include a cash value account, the policy focuses on the death benefit instead of cash value accumulation, so growth is minimal.

Who is GUL Best For?

GUL is best for people who need permanent coverage and have savings elsewhere. It can be a good option for those who want a death benefit to help their heirs pay expenses related to their death, such as estate taxes or inherited debts. It can also be suitable for those with someone who will depend on them indefinitely for financial support, such as a child with special needs. Additionally, retirees who want affordable life insurance but cannot qualify for term life due to age limits may find GUL appealing.

Pros and Cons of GUL

Pros:

• Affordable permanent coverage: GUL is less expensive than other permanent life insurance policies.
• Level premiums: Premiums remain the same until the selected maturity age, making budgeting easier.
• No-lapse guarantee: The policy will not lapse if premium payments are made on time and in full.
• Customizable: Policyholders can choose the length of the premium guarantee, and some policies allow for adjustments to the death benefit.

Cons:

• Pricier than term life insurance: While GUL is cheaper than other permanent policies, it is still more expensive than temporary term life insurance.
• Minimal cash value: The focus on the death benefit instead of cash value accumulation makes GUL less suitable as an investment vehicle.
• Missed payments could lead to quick lapse: GUL policies have little to no cash value reserve, so missing premium payments could result in a lapse in coverage more quickly than with other permanent policies.
• Doesn't offer true guaranteed lifelong coverage: Coverage could end or become significantly more expensive if the policyholder lives past the selected maturity age.

GUL policies are more affordable than other permanent life insurance options

Guaranteed universal life insurance (GUL) is a type of permanent life insurance that offers lifelong coverage at a lower cost compared to other permanent life insurance options. GUL policies are designed to provide a guaranteed death benefit with level (fixed) premiums, making them more affordable.

• Focus on Death Benefit: GUL policies prioritize the death benefit over growing cash value. This means that premiums are lower than universal or whole life insurance policies, which offer a more substantial cash value component. By focusing on the death benefit, GUL policies provide an affordable option for individuals seeking lifelong coverage without the need for cash value accumulation.
• Minimal Cash Value: GUL policies accumulate minimal or no cash value. This lack of cash value contributes to their affordability. Other permanent life insurance policies with higher cash values require higher premiums to fund the cash accumulation. With GUL, you pay primarily for the death benefit, making it a cost-effective choice.
• Fixed Premiums: GUL policies offer fixed premiums that remain the same until the chosen maturity age. This predictability in pricing makes budgeting easier and helps keep costs lower compared to other permanent life insurance options, which may have fluctuating premiums.
• Customizable Coverage: GUL policies allow individuals to choose how long their premium guarantee lasts. This flexibility enables individuals to customize their coverage according to their needs and budget. While longer guarantee periods result in higher premiums, the ability to select a shorter guarantee period can make GUL policies more affordable.
• No-Lapse Guarantee: GUL policies are guaranteed not to lapse as long as premium payments are made on time and in full. This is in contrast to other universal life insurance policies, where market conditions or inadequate funding due to flexible premiums can cause lapses in coverage. The no-lapse guarantee provides peace of mind and helps maintain affordability.
• Return of Premium Rider: Some GUL policies offer a return of premium rider, which refunds paid premiums if the policy is cancelled at specified times. This feature adds value and flexibility to the policy, making it a more attractive and cost-effective option.

In summary, GUL policies are more affordable than other permanent life insurance options due to their focus on providing a guaranteed death benefit, minimal cash value accumulation, fixed premiums, customizable coverage, no-lapse guarantee, and, in some cases, the return of premium rider. These features make GUL policies an attractive choice for individuals seeking lifelong coverage at a lower cost.

GUL policies have a no-lapse guarantee

Guaranteed universal life insurance (GUL) is a type of permanent insurance that offers lifelong coverage with level premiums and a guaranteed death benefit. GUL policies are often more affordable than other permanent life insurance options as they accumulate minimal cash value that can be used by the policyholder when they are alive.

GUL policies are sometimes referred to as "no-lapse guarantee universal life insurance". This is because they are designed to address the problems that traditional, non-guaranteed universal life insurance policies face when the cash value cannot cover the policy's expenses and the cost of insurance. With GUL policies, market conditions or inadequate funding cannot cause the policy to lapse. The policy is guaranteed to stay in force until the policyholder reaches their premium-guarantee age or passes away, whichever comes first. This is provided that the policyholder makes their premium payments in full and on time.

The no-lapse guarantee is a significant advantage of GUL policies over other types of universal life insurance. It ensures that the policy will not be cancelled even if the cash surrender value does not cover the cost of insurance. This gives policyholders peace of mind and guarantees lifelong coverage as long as premiums are paid on time.

However, it is important to note that GUL policies may lapse if premium payments are missed or made late. Since GUL policies have little to no cash value, the policy may terminate, and the insurance company will keep the premiums paid. Therefore, it is crucial for policyholders to stay up to date with their premium payments to avoid losing their coverage.

GUL policies offer fixed premiums that remain the same until the chosen maturity age. Policyholders can choose the policy maturity date, typically ranging from age 90 to 121. The longer the guarantee period, the higher the premiums will be. GUL policies provide affordable permanent coverage, making them a good option for individuals who need lifelong protection and have savings elsewhere.

GUL policies have a fixed premium

Guaranteed universal life (GUL) insurance policies have a fixed premium, meaning that the premium is guaranteed to remain the same until the policy matures. The premium amount is determined by the age at which the policy ends, which is chosen by the policyholder and can be set at 90, 95, 100, 105, 110, or 121. The closer the policy maturity age is to 121, the higher the premium will be.

GUL policies are a type of permanent insurance that offers lifelong coverage with level premiums and a guaranteed death benefit. They are more affordable than other permanent life insurance options because they accumulate minimal cash value. While a GUL policy might include a cash value account, the policy focuses on the death benefit, so growth is minimal.

GUL policies are also known as "no-lapse guarantee universal life insurance" because they are guaranteed not to lapse if the policyholder makes on-time premium payments in full. This is in contrast to other types of universal insurance policies, which can lapse due to market conditions or inadequate funding. GUL policies will stay in force until the policyholder reaches their premium-guarantee age or passes away, whichever comes first.

The fixed premium and guaranteed coverage of GUL policies make them a good choice for individuals seeking lifelong coverage who have savings elsewhere. GUL policies are also a good option for those who want a death benefit to help their heirs pay expenses related to their death, such as estate taxes or inherited debts. Additionally, GUL policies can be a good fit for retirees who want affordable life insurance but cannot qualify for term life insurance due to age limits.

GUL policies are best for people who need permanent coverage and have savings elsewhere

Guaranteed universal life insurance (GUL) is a type of permanent insurance that offers lifelong coverage with fixed premiums and a guaranteed death benefit. Unlike other universal life insurance policies, GUL accumulates minimal, if any, cash value. This makes GUL a more affordable option than other permanent life insurance policies.

GUL policies are best suited for individuals who:

• Need permanent coverage: GUL provides lifelong protection at an affordable price, often for less than a whole life policy. This makes it a good option for those who want permanent coverage but have savings elsewhere.
• Want a death benefit: GUL can help heirs pay expenses related to the policyholder's death, such as estate taxes or inherited debts. By choosing a GUL policy, individuals can ensure that their premium goes toward the largest possible death benefit for their budget, with little to no money going toward cash value.
• Have dependents: GUL can provide financial security for individuals with dependents, such as a child with special needs, who will rely on them indefinitely for financial support.
• Are retirees: GUL can be a more affordable option for retirees who are unable to qualify for term life insurance due to age limits. Some insurers continue to offer GUL policies to individuals in their 80s.

When considering a GUL policy, it is important to keep in mind that missing premium payments could cause the policy to lapse quickly due to the minimal cash value. Additionally, GUL may not offer true guaranteed lifelong coverage, as coverage could end or become significantly more expensive if the policyholder lives past the maturity age.

Frequently asked questions