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 realtor.com, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

More Stories

6 Best Indexed Universal Life Insurance (IUL) for 2023

Are you looking for a way to set aside some extra money for your senior years, and maybe a little extra for loved ones to inherit? Most people opt for indexed universal life insurance because it offers the greatest cash value growth tied to the performance of S&P 500 index with the least risk thanks […]

Best Self-Directed Roth IRA Companies for 2023

A self-directed Roth IRA is much like a regular Roth IRA, but offers more flexibility as far as what you can invest in. Whereas a regular Roth will only let you invest in stocks, bonds, mutual funds, ETFs, and real-estate investment trusts, a self-directed Roth lets you invest in a greater variety of investment options.  […]

The 5 Best Hybrid Long-Term Care Insurance Companies for 2023

If you’ve decided to plan for every eventuality, you’d be smart to include a plan to cover long-term care. Someone turning 65 this year has an almost 70% chance of needing some type of long-term care, and about 13% of those will need it for five years or more. Long-term care is expensive and can […]

The 3 Best Traditional Long-Term Care Insurance Companies for 2023

Long term care is something that no one likes to think about, but unfortunately, many people will eventually need. Health care costs are skyrocketing, and a lengthy stay at a long-term care facility can easily bankrupt most people’s nest eggs. Long-term care insurance is one way to protect both yourself and your retirement savings. Out […]

The Best Long-Term Care Insurance Companies in California for 2023

California residents who are keen to protect themselves and their families against the worst events in life may be considering long-term care insurance. However, you might not know much about LTC insurance or how it is handled in California. Let’s take a look: What is Long-Term Care Insurance? Long-term care insurance helps pay for long-term […]

The Best Long-Term Care Insurance Companies in Arizona for 2023

Arizona is a great place to retire. It’s warm, there’s no snow to shovel, and Arizona improves the quality of life for anyone with allergies or asthma. When you pack your bags and retire to Arizona, you’re probably not thinking about long-term care. But the sad reality is that 47% of men and 58% of […]

The Best Long-Term Care Insurance Companies in Florida for 2023

There’s a lot of good reasons to retire in Florida. The weather is warm, the beaches are beautiful, and there are lots of other retirees to socialize with. Also, Florida has no state income taxes, no inheritance taxes, and no estate taxes. When you pack up your things and move to Florida, you’re probably not […]

Private Placement Life Insurance: Everything You Need to Know

If you haven’t heard of private placement life insurance, you probably don’t qualify to buy it. Private placement life insurance is typically for investors with millions in liquid cash that they need to invest for tax reasons.  What is Private Placement Life Insurance? Who Qualifies for Private Placement Life Insurance? Benefits of Private Placement Life […]

Nationwide IUL – A Strong Product With Great Features and Excellent Ratings

The Nationwide IUL product can help you either supplement your retirement income or ensure your beneficiaries future by leaving them a nice tax-free death benefit. Obviously, you have many options when it comes to IUL policies, so you want to know how does Nationwide’s policy stack up against the competition? Let’s take a look. Pros […]

Transamerica IUL – A Solid Product but High Consumer Complaint Score & Law Suits

Consumers looking to supplement their retirement income often settle on an indexed life insurance policy. These policies build cash value based on market performance and allow your heirs to enjoy a tax-free death benefit. Let’s take a look at Transamerica’s indexed universal life insurance policy and see what makes it stand apart from other such […]