Guaranteed Universal Life Insurance (GUL) for Seniors: A Good Choice?

Thang Truong
Thang Truong
Updated on:

Many people think of life insurance as a product for people who are more in their early to middle ages. That’s the point in life when it’s more common to have financial dependents, between kids and perhaps a spouse. But universal life insurance could make sense of seniors, too. Guaranteed universal life insurance for seniors could perhaps even make the most sense. Below we’ll look at if guaranteed universal life insurance makes sense for your situation by assessing various pros and cons.

Pro #1: It’s a Fixed Option with Stability in Mind

You may be in a situation where your retirement funds are settled and your savings are more established. As such, you may be looking for a more stable option. With a guaranteed life insurance policy, you don’t invest or grow cash value. What you pay into the plan and set as your death benefit is it. 

>>MORE: Understanding How Guaranteed Universal Life Insurance Works

Pro #2: Guaranteed Universal Life was Created to Give the Most Coverage with the Lowest Premium

As a senior, you may be on a fixed monthly budget. So a lower and predictable premium may be a must. Guaranteed universal life insurance for seniors is a good option because you can keep your monthly costs lower than you would with a variable or indexed universal life policy. This plan was made with the lowest premiums for a decent death benefit amount in mind.   

Whole life insurance product also provides guaranteed coverage amount (also called face value of the policy). However it also offers guaranteed interest rate on the cash value account, which makes it much more expensive than guaranteed universal life insurance product. As seniors might be living on retirement account already, guaranteed universal life insurance makes much more sense from the cost perspective.

>>MORE: What Happens When A Universal Life Insurance Matures?

Pro #3: Riders Help You Access Cash if You Become Ill

As a senior, you could be worried about what would happen if you become ill or injured. The good news with guaranteed universal life insurance for seniors is that you can still attach riders onto the plan that helps you access cash specifically in these types of situations. These riders often allow you to access a portion of your death benefit, for example, if you are diagnosed with a terminal illness or need care.

>>MORE: Compare Guaranteed Universal Life Insurance with Whole Life Insurance

Con #1: It’s a Permanent Life Insurance Type

A main problem with guaranteed universal life insurance for seniors is that it is a type of permanent life insurance. As a senior, you might not need a permanent life insurance policy. These are known for being more expensive than options like term life. Basically, you’re paying for a policy that will never lapse if you keep up with premiums payment. However, you may not need the policy for 50 or 60 years. So a more affordable term life plan, which can last 10, 20 or 30 years, could make more sense.  

>>MORE: Using Guaranteed Universal Life Insurance for Wealth Transfer

Con #2: Getting Cash from the Account is Harder

Typically, with guaranteed universal life insurance, you access the cash through riders. The product really wasn’t created with flexibility in mind. You pay your one premium into the account and have a set death benefit.  

Worse, if you do take cash value out of the policy, that could raise your premiums. If you’re a senior on a fixed income, that could wreak havoc on your monthly budget.

>>MORE: Best 5 Companies for Guaranteed Universal Life Insurance

Con #3: No Cash Value Growth    

If you’re looking for a way to invest and grow cash value into your retirement years, guaranteed universal life insurance for seniors might not make the most sense. If that is a goal of yours, you might want to look into indexed or variable universal life insurance. You can often grow cash value depending on how markets or investments perform. These plans may also have floors on interest earned, meaning you won’t lose all your money if the markets perform badly.

>>MORE: Final Expense Life Insurance: Cost and Top 4 Providers

Final Thoughts

Even if you don’t need the plan for 60 years, you might still like the idea of a life insurance plan you don’t need to renew. Guaranteed universal life insurance for seniors gives stability in a universal life insurance plan with lower premiums than other types.  
However, if you want a plan that allows you to grow cash value, easily pull cash from the plan or only want the plan for a more limited time, guaranteed universal life insurance for seniors may not be the best option. 

And if you’re over 70 or 80 years of age, you can read here about how to find life insurance for seniors over 70 or 80.

Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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