What are the Pros and Cons of Guaranteed Universal Life Insurance?

guaranteed universal life insurance

What are the Pros and Cons of Guaranteed Universal Life Insurance?

Guaranteed Universal Life is often called “No Lapse” or “Secondary Guarantee Universal Life” in the insurance industry. Term life insurance will provide a guaranteed level premium and guaranteed death benefit for a limited period. Often times, you will outlive the guaranteed level period and must make a decision to secure a new policy at an older age when your health may not the best.

Whole life insurance will provide a guaranteed level premium and guaranteed death benefit beyond age 100, as well as, provide a guaranteed cash value. The whole life insurance policy will have the highest premium because of the existence of guaranteed cash value.

You may ask, what other options are there for you if you do not want: guaranteed cash value in the whole life policy, or cannot afford the whole life premiums and dislike term insurance because of the lack of long term guaranteed level premiums. A possible solution is Guaranteed Universal Life insurance.

Let’s look at the Pros and Cons of this life insurance product:


  1. Premiums can be level for lifetime. You can select the age they want the death benefit guaranteed to, whether it is age 90, 95, 100, 105, 115 or 121….
  2. The length of premium payments can be structured according to your preferences.
  3. Interest rate volatility does not affect premium payments.
  4. This product is inexpensive as a permanent life insurance product compared to other products, as the premium is calculated to maintain a level premium payment until death.
  5. Comparisons of this product among insurance carriers are relatively easy as there are not many components to the plan.
  6. Cash surrender values of permanent products can be transferred to this product without current income taxation on policy gains by utilizing a Section 1035 Exchange.

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  1. This product may not have any cash value, unlike alternative permanent life insurance products.
  2. Although premiums may be lower than whole life insurance or other permanent insurance products, they will generally be higher than term insurance.
  3. The greatest con of guaranteed universal life is that the timeliness of premium payments is critical to maintain the guaranteed level premium. Other policies that contain cash value can provide a source within the policy to cover the required premium to maintain the death benefit, however, a missed or late premium payment can jeopardize the guaranteed premium feature resulting in a policy without a guaranteed premium.

About the author:  Ken Buccico holds a LUTC designation and has been in the life insurance business for thirty-nine years. His wealth of experience empowers clients to make best possible decision regarding a life insurance policy. To explore the best life insurance option, contact Ken at 1-800-651-1953 or KBuccico@Pivot.com.

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