This article will discuss the Pros and Cons of Guaranteed Universal Life Insurance. Also referred to as "Universal Life with a No-Lapse Guarantee" and "Term For Life".
There has been a ton of interest from consumers regarding this product because it takes the best from both worlds. It has the guarantees that a term life insurance policy has and it doesn't expire like permanent life insurance. If you are searching for other types of insurance such as high risk life insurance, we have options for you too.
Lets start with the Pros:
PRO: Level premiums for the rest of your life.
The premiums never go up and your death benefit will never go down. Those looking for the most death benefit their dollar can buy over the rest of your life, this is the product for you.
PRO: Easy to understand.
Compared to other universal life and whole life policies, "Guaranteed Universal Life" is easy to understand because of the guarantees associated with it. There's no assumptions of future interest rates that will affect your policy like other universal or whole life policies. As long as you pay your premiums, all the guarantees stay in place. For permanent life insurance, it doesn't get much simpler than this.
Compared to other permanent life insurance products, Guaranteed Universal Life insurance is inexpensive. The premise is to take the lowest amount of premiums to keep the policy premium and benefit level until you die.
PRO: You Can Compare Companies Side by Side.
This isn't possible for any other type of permanent life insurance. Just understand, we have to take into account your health and every company will look at you different. However, it's nice to know you're securing the best life guaranteed universal life insurance on the market.
Lets get to the Cons now:
CON: No cash value.
The policy is built to minimize cash values, there is actually some cash value, but if you touch it, all guarantees go away. Other permanent policies have cash values that you can access.
CON: More expensive than term life insurance.
Since the policy doesn't expire like term life does, the premiums are more expensive than a term life insurance policy.
CON: If you miss a payment, the guarantees are taken away.
This is the BIGGEST con. People change bank accounts or move residences and forget to update their address with the life insurance company. If this happened with whole life and other universal life insurance policies, they would take premiums from your cash value until you get back on track - so you have some flexibility. With guaranteed universal life, if you miss a payment then the "no lapse guarantee" is taken off the policy when you re-instate it. Your premiums are no longer guaranteed when you miss a payment.
If you're considering a guaranteed universal life insurance product, right now is the time to apply. Rates have been consistently going up the last 2 years. They are still very affordable, but rate increases industry wide are a common occurrence.
We hope this article helped you weigh the pros and cons of guaranteed universal life insurance. If you have any additional questions or would like a quote, please don't hesitate to contact the team at RootFin.com by calling us or fill out the form on the right.