Guarantee Universal Life (UL)
Guaranteed Universal Life Insurance now sells at prices well below the Guarantees of the old current assumption Universal Life plans sold in the 80’s & 90’s. The Guaranteed UL policies are often referred to as “secondary” or “no lapse” guarantee products. Often when one thinks of Universal life they remember how the old policies would lapse if the cash went down to the point that it was insufficient to cover a policy’s increasing cost of insurance and the expense charges built into the policy. With the no-lapse feature or “secondary guarantee” the policies are Contractually Guaranteed to stay in-force for the guaranteed period ( typically to Age 100 or Age 120 ) if the premium is paid regularly and on time, even if the cash value decreases to Zero Dollars.
Secondary Guaranteed UL fist came into existence around the year 2000. The design of the Newer Guaranteed UL plans with Low Guaranteed Premiums and Guaranteed Death Benefits, make it an extremely attractive purchase for those that want a Permanent Death Benefit but don’t want to pay a whole life type of premium. Why pay higher premiums To build cash value, when all you want to do is “buy a death benefit”? If you could pay term like premiums but have a “whole life” benefit would that make sense to you? When you consider what has happened with Life Products tied to Equity Markets it is easy to understand the draw to Guaranteed Life Insurance Policies. Carrier illustrations provide supporting documentation that Guaranteed UL Death Benefits can deliver internal rates of return(depending on Age at issue underwriting class) on premiums paid of 6 percent or more at age 90, 4 or 5 percent at age 95 and 3 or 4 percent at age 100. Additionally, consider that Life Insurance proceeds are passed on to Beneficiaries income tax free. Whole Life can cost up to two times a Guaranteed Universal Life policy. Term Life Insurance only lasts for the Term of the policy. Why not consider a Guaranteed Premium to Age 100, Guaranteed Death Benefit to Age 120 type of plan referred to as “Term to 100” ?
