Searching for an affordable life insurance policy that allows you to leave behind a large legacy? You may want to consider Guaranteed Universal Life Insurance (GUL). This universal life insurance offers the flexibility of an adjustable premium and a no-lapse guarantee for policy holders. If you meet the requirements of the guarantee, you don’t have to worry about your policy lapsing. Learn more about Understanding how Guaranteed Universal Life Insurance Works
GULs may not meet the needs of everyone. They don’t allow cash-value accumulation. So, you won’t be able to rely on them as a potential source of retirement income. So, it’s a good idea to research policies and compare them before you pick.
>>MORE: Understanding Indexed Universal Life Insurance: Why Is It a Good Idea for Retirement Savings?
A Quick Look at the Five Best Companies Offering Guaranteed Universal Life Insurance
We’ve pulled illustrations from some of the best GUL policies to show you exactly what it involved in each and how they stand apart from each other. The information we used is for a 46-year-old man living in Texas. The man wants a permanent life insurance policy with a 19-year payment schedule, ie. he only wants to pay premiums until he is 65 years old, when he retires. At this rate, he’ll have paid up all of his premiums and won’t have to worry about making any future payments as long as he lives. The guaranteed death benefit for each policy is $500,000 with the potential to earn some cash-value too.
We’ve pulled illustrations from six life insurance companies to compare the premium payments and any special features of each. The first five policies are GULs and the last is a Whole Life Insurance policy to serve as a comparison.
| Insurance | Premium Payment | Guaranteed Interest Rate |
| American National Signature Guaranteed Universal Life Insurance | $5,769 Annual | 2.5% cash-value portion |
| Prudential PruLife Universal Protector | $6,155 Annual | 1% on cash-value portion |
| Nationwide No-Lapse Guarantee UL II | $6,202 Annual | 1% on cash-value |
| Principal Universal Life Protector V | $7,189 Annual | 2% on cash-value |
| AIG Secure Lifetime GUL3 | $7,388 Annual | 2% on cash-value |
| Penn Mutual Guaranteed Whole Life | $12,635 Annual | N/A |
As you can see from the table, the premium payments for the whole life insurance policy are more than double the premium for the cheapest GUL policy. This is because a sizable part of the whole life insurance premiums are used to grow the “cash-value” of the whole life policy, so more premium payments are needed. If you want to maximize the death benefit for your family when you pass away, GUL is the best product. It provides permanent and guaranteed death benefit coverage at a very affordable cost.
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The standard GUL does offer a small amount of cash-value growth, but this isn’t meant to be relied on as a financial investment. Some policies will be set up to draw premium payments and administrative fees from any cash-value first before taking payment from the policy holder. By the time the premium payments are completed, most policies will only have a few thousand dollars in cash-value.
Whole life policy also offers permanent and guaranteed death benefit. However, it provides a cash value account, which earns interests. That is the main reason why whole life is much more expensive.
>>MORE: Compare Guaranteed Universal Life Insurance With Whole Life Insurance
If you are interested in having a cash value account in your policy that earns interest rate and may provide you with access to a cash value account if and when you need it, you should consider indexed universal life insurance (or IUL) instead. The cash value account in an IUL policy earns a much higher interest rate since it is tied to the performance of an index, usually S&P 500 index. It also offers more flexibilities in premiums payment and withdrawal from the policy. Last but not least, it is usually much more affordable than whole life insurance for the same coverage. However, unlike whole life policy, IUL policy usually doesn’t offer guaranteed death benefit. Rather, death benefit coverage of the policy is dependent on the performance of the cash value account.
Nationwide No-Lapse Guarantee UL II
Nationwide’s No-Lapse GUL has mid-range target premium of $6,202.00 annually for the $500,000 death benefit. There is no cash-value accumulation, the interest growth is only 1% and administrative fees are deducted from this component of the policy every month. The policy does have two riders in place to keep it from lapsing, the Initial No-Lapse Guarantee Policy Continuation that is in place for the first five years of the policy and the Extended No-Lapse Guarantee Policy Continuation, which provides protection until the policy reaches maturation when the policy holder is 120 years old. Read our full review of Nationwide Life Insurance
Principal Universal Life Protector V
Principal’s Universal Life Protector V is on the high side with a target premium payment of $7,188.50. Along with the $500,000 guaranteed death benefit, the policy also manages to accumulate a little cash-value. By year 19, the cash-value is $25,533, but this rapidly decreases to zero in the following years due to administrative fees. Read our full review of Principal Life Insurance Company
AIG Secure Lifetime GUL3
With the highest premium payment of the five GUL policies we pulled, AIG’s Secure Lifetime policy has a target amount of $7,387.84 annually. This policy offers an Enhanced Surrender Value Rider allowing policy holders to access this large nest egg, if they should need it for retirement. With this rider, policy holders have the opportunity to surrender their policy at Year 20 to receive 50% of the premiums paid in and again at Year 25 to receive 100% of the premiums paid. However, when the policy is surrendered, the life insurance coverage also ends. Read our full review of AIG Life Insurance Company
>>MORE: AIG Guaranteed Universal Life Insurance Review
Prudential PruLife Universal Protector
This Prudential policy has an annual premium of $6,155.00. It’s also one of the GULs that allows some cash-value to accumulate. At Year 19, it has $9,383 in cash-value. This policy is set up to withdraw administrative fees from the cash-value, so that amount quickly depletes. At this point, the premiums are considered already paid up and the no-lapse guarantee covers the policy to keep it active. Read our full review of Prudential Life Insurance Company
American National Signature Guaranteed Universal Life Insurance
American National’s Signature GUL has the second lowest premium payment of the GULs we pulled at $5,768.60 annually. The policy also has a slightly higher interest rate of 2.5% on the cash-value compared to the other policies. It comes with a 10 Year Minimum Premium Guarantee that prevents the policy from lapsing within the first 10 years, and a No-Lapse Guarantee Account that kicks in after 10 years to prevent the policy from lapsing thereafter. Read our full review of American National Life Insurance Company
Penn Mutual Guaranteed Whole Life
The whole life insurance policy we pulled from Penn Mutual is set up to guarantee $500,000 death benefit, similar to other GUL policies. The policy’s premium payments are about $12,635 per year, which is more than double the premiums of GUL policies.
The additional cost of whole life insurance is to pay for dividend payments from the insurance company, which are used to buy additional paid-up coverage. Thanks to that, its non-guaranteed death benefit will reach more than $1 Million when the insured turns 80 years old.
Dividend payment depends on the performance of the insurance company. That’s the reason why it is non-guaranteed.
>>MORE: Is Guaranteed Universal Life Insurance Worth It?
Final Thoughts:
- Guaranteed Universal Life Insurance allows policy holders to get permanent life insurance with an adjustable, target premium.
- AIG’s Secure Lifetime GUL3 has the highest premium payment and American National’s Signature Guaranteed Universal Life Insurance product has the lowest premium.
- GULs aren’t designed to accumulate cash-value for policy holders.
- Whole life insurance policies for the same guaranteed coverage demand more than twice as expensive. However, with dividend payments, its non-guaranteed death benefit can be more than double as well.
