Main differences between guaranteed universal & other life insurance policies
Table of contents
Table of contents
Guaranteed universal life insurance is a type of permanent life insurance that comes with fixed premiums, minimal cash value, and a guaranteed death benefit. It’s one of the most affordable and convenient policy types you can purchase to get lifelong coverage.
Sometimes called GUL, guaranteed universal life insurance is cheaper than other types of permanent life insurance, like whole life insurance. It’s more convenient, too.
Unlike other kinds of universal life insurance — that allow you to increase or decrease how much you pay in premiums, with the difference covered by the policy’s cash value — GUL premiums remain the same throughout the life of the policy. And the policy won’t lapse if the cash value isn’t enough to cover the policy expenses, which avoids the risk of poor market performance that other universal life policies face.
Guaranteed universal life insurance (GUL) is one of the most affordable and convenient types of permanent life insurance on the market. Here are some of its key features.
Affordable: GUL is cheaper than other permanent options, like whole life insurance.
Refundable: Some GUL policies come with a return of premium rider that will refund your paid premiums if you cancel your policy at specified times.
Consistent: Premiums remain at a fixed rate as long as you continue to pay them, similar to term life insurance policies.
Flexible: You can adjust the coverage amount on a GUL policy if your needs change.
Straightforward: GUL combines the simplicity of a term policy with the lifelong protection of a permanent policy. While it comes with a cash value account, it’s usually minimal, so it requires little maintenance — but it’s usually not suited for building wealth.
Convenient: GUL policies commonly mature when you’re between the ages of 95 and 121, but you can select the exact age. The higher the age, however, the more expensive the premiums.
In some aspects, guaranteed universal life insurance works like a term life insurance policy. You pay the same premium for the entire duration of the policy, and when you die, your beneficiaries receive the death benefit as long as the policy is active or in force. GUL policies guarantee a minimum death benefit regardless of market performance, which is not the case for other types of universal policies.
Unlike other types of universal life insurance, the cash value of a GUL policy is not based on market performance, either. While this reduces risk and makes a GUL policy more affordable than other types of permanent policies, it also means its cash value is usually minimal and not a good option if you’re looking for life insurance as a way to diversify your investment portfolio.
Guaranteed death benefit
Fixed premium payments
Lower market risk compared to other universal life insurance products
Lower cost than other permanent products
Still more expensive than term
Very little to no cash value
Average cost ($500,000 policy)
Yes, but minimal
Level, but depends on type of policy
$100,000 coverage amount
$250,000 coverage amount
$500,000 coverage amount
We used industry data, pricing from Policygenius carrier partners, and third-party ratings like A.M. Best and J.D. Power to pick the best insurers on the market. Our independent recommendations will help you get life insurance coverage with confidence.
Why we picked it
Pacific Life is an A+ rated company that offers a competitively priced guaranteed universal life insurance option when compared to other carriers. It also offers a return-of-premium feature. This makes it a great choice for someone who is looking for a permanent death benefit at an affordable cost.
Why we picked it
Protective Life is also A+ rated according to A.M. Best. They offer a similarly priced guaranteed universal life insurance option. Like with other types of life insurance, the best company for you will be dependent on your health profile and personal circumstances. Protective can be an affordable choice for applying for GUL with several types of common health conditions, like depression.
Guaranteed universal life insurance can be a good option in these scenarios:
The best way to determine if a universal life insurance policy is right for you is to speak with a financial advisor or licensed insurance agent. At Policygenius, our experts are licensed in all 50 states and can walk you through the entire life insurance buying process while offering transparent, unbiased advice.
Guaranteed universal life insurance is a cost-effective option if you know you need a permanent life insurance benefit. It’s a low-risk and relatively straightforward type of permanent life insurance. If you’re not certain if permanent life insurance or GUL is for you, it’s best to speak with a financial advisor.
Katherine Murbach is an editor and a former licensed life insurance agent at Policygenius. Previously, she wrote about life and disability insurance for 1752 Financial, and advised over 1,500 clients on their life insurance policies as a sales associate.
Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.
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