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Main differences between guaranteed universal & other life insurance policies
Guaranteed universal life insurance: What it is, how it works
Guaranteed universal life insurance is a type of permanent policy with fixed premiums, a guaranteed death benefit, and minimal cash value.
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Maria FilindrasMaria FilindrasFinancial AdvisorMaria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.Updated|3 min read
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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.
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What is guaranteed universal life insurance?
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.
How does guaranteed life universal life insurance work?
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.
Pros & cons of guaranteed universal life insurance
Pros
Guaranteed death benefit
Fixed premium payments
Lower market risk compared to other universal life insurance products
Lower cost than other permanent products
Cons
Still more expensive than term
Very little to no cash value
Main differences between guaranteed universal & other life insurance policies
Policy type | Length | Premiums | Death benefit | Cash value | Dividends | Average cost ($500,000 policy) |
Guaranteed universal | Permanent | Fixed | Yes | Yes, but minimal | No | $227.50 |
Universal | Permanent | Flexible | Yes | Yes | No | Flexible |
Whole | Permanent | Level, but depends on type of policy | Yes | Yes | Yes | $555.00 |
Term | 10-40 years | Fixed | Yes | No | No | $42.26 |
Methodology: Average estimated monthly rates are calculated using 35-year-old male and female rates at a Standard non-smoker health classification. The term policy is based on a 20-year term for the purposes of the illustration. Term rates are based on a composite of policies offered by Policygenius from Banner Life, Brighthouse Financial, Corebridge Financial, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, and Transamerica. Guaranteed universal rates are based on sample policies through Pacific Life, and whole life rates are based on sample policies through MassMutual. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 06/01/2023.
How much does guaranteed universal life insurance cost?
Age | Gender | $100,000 coverage amount | $250,000 coverage amount | $500,000 coverage amount |
25 | Female | $44.00 | $79.00 | $137.00 |
Male | $48.00 | $89.00 | $160.00 | |
35 | Female | $59.00 | $117.00 | $213.00 |
Male | $64.00 | $130.00 | $242.00 | |
45 | Female | $85.00 | $187.00 | $342.00 |
Male | $95.00 | $207.00 | $393.00 | |
55 | Female | $130.00 | $291.00 | $560.00 |
Male | $146.00 | $331.00 | $639.00 |
Methodology: Monthly estimated rates are based on Standard non-smoker health classification for females and males for guaranteed universal life insurance policies offered through Pacific Life, to endow at age 121. Illustration valid as of 06/01/2023.
Best guaranteed universal life insurance
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.
Best overall: Pacific Life
Runner-up: Protective Life
Methodology: How we chose the best guaranteed universal life insurance companies
We don't get paid for our company reviews and use an extensive rubric of criteria covering policy details, price, financial confidence, third-party ratings, and customer experience to assign unbiased ratings out of five stars. Any recommendations we make are based on internal and external expert opinions and data from our Policygenius Price Index, which uses real-time rate data from leading life insurance companies to determine pricing trends.
Our ratings and reviews can help point you to an insurer you can rely on for your family’s financial protection, but the best life insurance company for you is dependent on multiple factors. A licensed agent at Policygenius can work with you through the application process so you’re getting coverage from the best insurer for your circumstances at the most competitive price.
Best overall guaranteed universal life insurance
Pacific Life offers competitive rates at every age group and a variety of insurance products.
Pros
Affordable prices at every age
Strong financial ratings
Cons
No accelerated underwriting
No online quote tool
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.
Runner-up
Protective has some of the most affordable and comprehensive life insurance options available.
Pros
One of the best values on the market
Solid suite of online tools
Cons
Slow application approval
Zero no-medical-exam options
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.
Who should buy guaranteed universal life insurance?
Guaranteed universal life insurance can be a good option in these scenarios:
You want a permanent death benefit but are looking to keep costs relatively low.
You need a permanent insurance policy for a dependent with special needs and want to set up a special needs trust to distribute the death benefit.
You want your benefit to cover estate tax but don’t have a need for the cash value.
You’re an older adult with average or below-average health seeking affordable coverage. Compared to term policies — which are cheap when you’re young and healthy but get more expensive as you age and your health changes — GUL offers lifelong coverage at a competitive rate.
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.
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Is guaranteed universal life insurance worth it?
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.
Frequently asked questions
Does guaranteed universal life insurance have a cash value?
Guaranteed universal life insurance policies technically have a cash value account, but it doesn’t provide significant growth like other permanent products.
What happens to the cash value in guaranteed universal life insurance at death?
Guaranteed universal life insurance often does not have a large cash value, but the death benefit will be paid out to the beneficiary, similar to other kinds of life insurance.
What’s the difference between guaranteed universal life insurance and whole life insurance?
Whole life insurance is a type of permanent policy with a cash value component that can be used for investment purposes in addition to the standard death benefit. Guaranteed universal life insurance is a type of policy that offers lifelong coverage but does not accumulate cash value. Instead, it offers a guaranteed minimum death benefit and fixed premiums.
Can I withdraw money from my guaranteed universal life insurance policy?
Typically, no. If you accumulate a cash value, you can borrow from that sum of money. However, guaranteed universal life insurance policies do not accumulate a significant cash value compared to other types of insurance products, like whole life.
Author
Katherine Murbach
Editor & Licensed Life Insurance Agent
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.
Expert reviewer
Maria Filindras
Financial Advisor
Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.
Questions about this page? Email us at editorial@policygenius.com.