Guaranteed Universal Life insurance (GUL) is universal life insurance that guarantees that the policy will not lapse when consistently paying a specific premium that is guaranteed to not go up. The guaranteed no lapse period can often be chosen. E.g. you might choose the policy not to lapse to your age 90, or to be safe, to your age 120.
The guaranteed premium is based on what it would take to keep that policy in effect that long at the minimum guaranteed interest rate, and the maximum COI (cost of insurance).
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
How does Guaranteed Universal Life work? Just like level term. Think of it as lifetime level term. With term insurance you pay a premium every month and you have coverage. With GUL you pay the premium every month and you have coverage. The GUL rider on a polcy states that as long as the premium is paid and the policy values remain untouched the company will pay a death claim out to the age chosen by the insured. It could be to age 90, 100, 110, 121 or until passing.
The big thing with a GUL vs. a Level term policy is cash values. With level term the insured does not see the cash values generated by the level term policy during it's level premium run. With level term you overpay early to underpay later and this keeps the premium constant. Same with GUL except now you can 'touch" the money inside the policy. This is a bad thing if you want the guarantee to remain in place. You simply do not want to mess with your GUL beyond paying your monthly premium every month. GUL is NOT a saving plan... it is Lifetime TERM, or at least, it should be treated that way.
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The guaranteed premium is based on what it would take to keep that policy in effect that long at the minimum guaranteed interest rate, and the maximum COI (cost of insurance).
The big thing with a GUL vs. a Level term policy is cash values. With level term the insured does not see the cash values generated by the level term policy during it's level premium run. With level term you overpay early to underpay later and this keeps the premium constant. Same with GUL except now you can 'touch" the money inside the policy. This is a bad thing if you want the guarantee to remain in place. You simply do not want to mess with your GUL beyond paying your monthly premium every month. GUL is NOT a saving plan... it is Lifetime TERM, or at least, it should be treated that way.