Guaranteed universal life insurance, sometimes referred to as GUL or ULG is auniversal life insurance policy hybrid with firm guarantees and much flexibility upon policy inception. It is a universal life insurance policy with the addition of secondary guarantees or the no-lapse provision rider.
Essentially these policies provide a guaranteed premium to keep the policy in force, regardless of the cash values.
In a typical, ordinary universal life insurance policies, the cash value account is built up over time by premiums beyond the actual cost of insurance and accrued interest (less expenses and mortality costs). In markets where interest rates become unfavorable, the cash accounts can dwindle quickly (especially at older ages) and create the need for increased premiums.
The no-lapse rider provides for a guaranteed premium and death benefit. Upon policy issue, you may predetermine how long premiums are payable (from 1 year to lifetime premiums) and how long the death benefit is guaranteed to remain in force. Many times cash values are transferred tax free from one policy to another in exchange for a GUL policy with no future premiums. The death benefit is calculated based on how much cash is coming into the new policy or premium needed is solved for a target death benefit .
Guaranteed universal life insurance is common for those who wish to have a permanent death benefit and premiums that are lower than whole life insurance. They are also popular choices for policies owned in trust.
Click here to see actual situations where whole life policies were exchanged for a GUL policy.
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