Guaranteed Universal Life Insurance / A Guide to Finding a Low-cost Policy

Do you need a permanent life insurance policy? But, have been procrastinating because you are concerned about the high cost of permanent coverage. Then, you really should take a serious look at the new guaranteed universal life insurance policy (GUL).

Modern guaranteed universal life insurance is very affordable and can accumulate cash values like whole life, or have no cash value similar to term insurance.

There are a number of different permanent life insurance policies such as universal life, indexed universal life, variable life, and whole life.

Most people automatically associate all permanent coverage with much higher costing premiums because of the savings element involved.

These applicants typically jump into term life coverage assuming it is always the best option for paying lower premiums.

Keep in mind, we are strong advocates of the long time adage of “Buy Term, and Invest the Rest”.

This philosophy is also embraced by popular radio and television personalities such as Dave Ramsey and Suze Orman.

The idea is to buy cheap term insurance, and invest the premiums that would have been allocated towards permanent coverage.

However, if you need coverage for a longer period of time, permanent life insurance coverage is now available at a similar price point to term life.

Guaranteed universal life is slightly more expensive then term insurance at younger ages, but the pricing spread lessens as people get into their 50’s and 60’s.

People are living longer because of continued improvements in medical science.

Why should your coverage die before you do?

This is not like your parents whole life policy!

Universal Life Insurance vs Whole Life

Universal Life Insurance vs Whole Life

First, it is helpful to understand both permanent life insurance options:

  • Whole Life Insurance
  • Guaranteed Universal Life Insurance

The whole life definition is pretty straightforward: a permanent life insurance policy with lifetime guarantees on the cash value, premium, and death benefit.

Whole Life policies are designed to ensure you have life insurance coverage for the duration of your life.The money placed in the guaranteed cash value portion of your policy will earn  tax-deferred interest which will grow over time.

What is universal life? Guaranteed universal life insurance has a fluctuating cash value, and also offers guarantees on both the premium and death benefit.

So, a portion of the premium you pay will go towards paying for your death benefit while the other part will go towards the cash value. The money placed in the cash value portion of your policy will earn tax-deferred interest and will fluctuate over time.

What is difference between whole life and universal life?

The main difference between whole life and universal life is that whole life has a guaranteed cash value and also pays an annual dividend on your insurance. Since, whole life insurance has a guaranteed cash value, the required premiums are much higher to maintain lifetime coverage.

People who cannot afford whole life insurance rates, or not interested in it’s low rate of return should consider guaranteed universal life. These policies offer a lower premium then whole life insurance, and have both a current and guaranteed interest rate on cash value.

How does universal life insurance work?

How does universal life insurance work?

Universal life insurance companies offer a multitude of different plan designs which can make understanding the policy confusing at times. So, it is also important to understand two different  designs before getting universal life insurance quotes.

How does universal life insurance work? We make it easier to see your policy in action using our universal life insurance calculator to structure a plan that either:

  • Builds cash values like whole life (but is much cheaper)
  • Does not build any cash values and functions more like term insurance

Higher Premiums with Cash Value Accumulation

Guaranteed universal life insurance policies can be designed to accumulate excess cash values inside the policy. For people with extra money, over-funding the cash account gives people flexibility and freedom in the future.

If the investment options are successful, the cash value of the policy builds up faster than projected. This can allow a policyholder to skip a premium payment, pay less than the scheduled premium, or have the policy paid-up at a certain age. If you have accumulated substantial cash surrender values you can also elect to withdrawal or borrow against the policy.

But if the investment options are not successful, it’s possible to lose some of the cash value within a universal life policy. If the policy has not met the projected interest rates, the policyholder can always increase the premium so that the policy can continue to build cash value.

Keep in mind, that modern guaranteed universal life (GUL) policies also offer a no-lapse guarantee. Even if poor investments have taken virtually all of the policy’s cash value, the death benefit remains in force as long as the policy premiums are paid.

Lower Premiums with No Cash Values

Policyholders who are not interested in accumulating money or who are apprehensive of fluctuating cash values have a another option. This is a “hybrid design” of guaranteed universal life insurance which combines elements of both term life coverage and universal life.

These lifetime plans do not accumulate much cash value, but the premiums have a no lapse guarantee which can be selected for periods of time, or to a specific age (i.e. 90, 95, or 100).

So, premiums can be scaled to coordinate with your desired budget and the death benefit required for your family. As long as you continue to pay the no-lapse guarantee premium your coverage will remain in force.

Guaranteed Universal Life Insurance Quotes

Guaranteed Universal Life Insurance Quotes

To get your universal life insurance quotes from a list of life insurance companies use our Universal Life Insurance Calculator. Simply select the death benefit you require, and the age you wish to guarantee your coverage (age 90, 95, or 100).

Here is an example of preferred rates, for a healthy male, on $100,000 of guaranteed life insurance coverage.

Guaranteed Universal Life Insurance Premiums

Age To Age 90 To Age 95 To Age 100
50 $65.62 $72.54 $76.48
51 $67.76 $75.29 $80.59
52 $69.97 $78.16 $84.96
53 $74.38 $82.69 $89.78
54 $81.34 $89.13 $94.94
55 $91.16 $98.62 $100.20
56 $94.06 $102.71 $104.70
57 $96.78 $106.73 $109.70
58 $99.22 $110.70 $115.30
59 $101.60 $114.79 $121.50
60 $103.79 $118.91 $128.40
61 $106.62 $124.48 $135.80
62 $110.42 $130.68 $143.50
63 $117.52 $139.52 $152.16
64 $126.78 $150.10 $161.18
65 $135.11 $160.35 $170.89
66 $136.90 $166.30 $181.74
67 $137.82 $171.87 $193.29
68 $146.91 $183.08 $207.10
69 $158.26 $196.21 $220.60

Finding a Universal Life Insurance Company

We use a very detailed process when shopping for universal life insurance for our clients. Our goal is to find the best product in the marketplace from a highly rated universal life insurance company.

These “hybrid designs” are not offered by every universal life insurance company. The contractual guarantees offered to policyholders eliminate many smaller companies, which lack adequate cash reserves to honor these long term commitments.

The financial ratings of the company are very important when selecting any long term contract. The universal life insurance company selected must be financially sound to guarantee coverage for the duration of your contract.

We monitor the financial strength and claims paying ability of each company by using a number of different rating agencies like AM Best, Standard and Poor’s, Moody’s, and Duff and Phelps.

Wow, this sounds very interesting!

Should I replace my poor performing permanent policy?

 

Did you get a lemon?

You may have, if you purchased a policy that is not performing as originally illustrated.

 Many polices purchased in the 1990’s, now require policyholders to contribute additional premiums to prevent their coverage from lapsing sooner then initially projected. 

These policies should be evaluated to see if they can be replaced with a more competitively priced guaranteed universal life policy (GUL).

Moreover, if cash value accumulation is also no longer a concern, a new universal life policy can also be used to replace existing “cash rich” permanent life insurance.

Since, life insurance companies keep your cash values upon your death, having excess cash in the policy is pointless assuming you can qualify for a new policy.

How do you know if a new guaranteed universal life insurance policy could be more beneficial to your family?

We use our universal life insurance calculator to conduct a detailed evaluation of how your current policy is performing compared to using your existing cash values towards a new policy.

This is how we do it:

  1. 1035 Exchange – First, the cash surrender value from your current policy can be easily transferred tax free into a new policy utilizing a 1035 exchange. Illustrations will be generated on new guaranteed premium policy for the death benefit you require by transferring your using existing policies guaranteed cash value. A few scenarios will be evaluated:
    • Same Death Benefit and Lower Premium – Modern universal life policies can be purchased for the same death benefit while substantially lowering the premium.
    •  Death Benefit and No Premium – Depending on the cash surrender value available, the death benefit can also be designed with a death benefit that requires no  future premium payments (paid up policy).
    • Smaller Death Benefit -If you do not have a lot of cash value, or your need for life insurance has changed, you might get by with a smaller face amount.
  2. Cash Out – Finally, illustrations will be generated on a new policy for the death benefit you require without using your existing policies cash value. You can surrender your old policy upon the approval of new coverage.

Guaranteed Universal Life Insurance

How do I apply for Coverage?

These policies are also medically underwritten, so it is important check into whether you can actually qualify for coverage.

First, your general medical history is initially evaluated to determine which company may be best suited for your particular medical history. Most companies also require a brief insurance examination.

Your medical profile and exam are submitted to several highly rated companies to determine which carrier would be willing to offer coverage at the most competitive rate class.

This process allows us makes accurate product comparisons based on how your medical history fits with each insurance company.The underwriting process can take between 3-4 weeks depending on the details of your medical history.

To get your universal life insurance quotes online from a list of life insurance companies use our  Life Insurance Premium Calculator. Simply, select the death benefit and the duration you would like to guarantee your coverage. (i.e age 90, 95, or 100). If you need assistance in your search, please do not hesitate to call us 1-877-249-1358.

Eric Van Haaften, LUTCF is the president of Affordable Life USA. We are a nationally licensed life insurance agency focused on finding our clients custom planning solutions at excellent prices. 1-877-249-1358. eric@affordablelifeusa.com