There are many different types of life insurance, and they all serve different purposes. For example, there is insurance coverage that lasts a lifetime and coverage that only lasts a specific number of years.
Term life insurance is generally a great choice. It offers coverage when you need it the most and is typically more affordable than other kinds of policies.
That said, insurance coverage that lasts a full life may be the better option for a variety of reasons. For example, if you anticipate still having dependent family members as you enter old age, have debts that are not going to be paid off for a long time, do not plan on retiring at the average age, etc.
In cases like these, it is important to consider a universal life insurance policy. If you aren’t familiar with universal life insurance plans, you’re not alone. Most people don’t understand these plans or the benefits/costs of them.
Coverage that lasts a lifetime tends to be more expensive. But if you are looking to save money and get a policy that is guaranteed to last until you die, Guaranteed Universal Life Insurance may just be for you.
How Does Universal Life Insurance Work?
If you’re going to get universal life insurance, you might as well make sure the death benefit is guaranteed.
This means that there will be a payout even if the buildup of its cash value suddenly falls behind or the overall costs of insurance go up.
In these situations, a policy would often lapse back to the insurer. However, if you make sure your policy is a “secondary guarantee policy”, this will ensure it will remain active regardless of what happens.
All you have to worry about is paying your premium rates as they are due. This is why secondary guarantee universal life policies have become so popular.
Both the policyholder and the insurance company used to share the risk of this kind of policy. So if it ended up performing poorly, the policyholder could very well lose the death benefit.
If you make sure your policy is a guaranteed universal life one, you will avoid this problem.
With a Guaranteed Universal Life Insurance policy, you pay a premium that is guaranteed to not go up as time goes on. Or rather, for as long as your chosen no-lapse period.
This period of time can go up to age 90 or even all the way up to age 121 if you choose. But your policy will remain in effect so long as you pay the premium. Simple, right?
Universal Life vs Term Life
You may have heard of “Level Term” life insurance, in which the premium stays level for a certain period of time.
This sounds almost like it could be a synonym for Guaranteed Universal life. But the two are actually entirely different kinds of policies.
With Guaranteed Universal Life, you are able to have access to the cash value in your coverage account should you need it (though this should not be your retirement savings plan). With Level Term, there is no cash value.
Term life also expires, at which time the pricing increases. While Guaranteed No Lapse Universal Life does not.
You can see differences in pricing by using the quote tool on this page. Put in “to age 121 level (no lapse u/l) and then compare that to a term policy.
Benefits Of Guaranteed Universal Life
There are a variety of benefits to this kind of life insurance, but here are the main ones you should know about:
- It Lasts Forever— Policies go up to age 121. Which let’s face it, the vast majority of people will never see.
- It’s Cheaper than Whole Life— Whole life insurance also lasts a lifetime. But it is a lot pricier since it is intended to build up more cash value than Guaranteed Universal Life. With Guaranteed Universal Life you have a permanent policy at a cheaper cost.
- You Can Use the Money in Your Account— As mentioned, with Guaranteed Universal life, you can build up some cash value and access it. The policy is guaranteed to stay in place until you need the funds (as long as you’re paying the premiums, of course).
- Premiums Stay Level— The premiums are guaranteed to not go up, which is great for when you retire and are living on a somewhat more limited budget.
Term life insurance coverage does suit the needs of many. But Guaranteed Universal Life Insurance could be the best choice for you if lifetime coverage is what you’re after.
Getting Guaranteed Universal Life
There is more to securing the best life insurance policy than picking a plan you like. With a little research, and perhaps a bit of exercise, you can get a plan with substantial coverage at affordable premiums.
Choose a Simple Universal Life Policy Design
Want to know a secret? You don’t actually need all those extra features on your policy. These are things like different investment options and hedging strategies.
They certainly can be appealing, and they may even benefit you in a small way. But the reality is they just make your policy that much is harder to manage.
Policies like variable universal life and indexed universal life are dependent on the performance of the insurer’s own investments and financial situation. They could also depend on the market, which leaves room for uncertainty.
Essentially, the insurance provider estimates what their performance will be like. Then they encourage policyholders like you to pay premiums that are actually higher than the minimum required payment. This is just to ensure your policy remains active.
Unfortunately, you could end up wasting a lot of money in this scenario. Because the insurance company’s assumptions about their performance could turn out to be incorrect.
Now, these types of policies are geared primarily toward individuals looking to save up for their retirement funds.
If this is you, the best kind of universal life policy has clear policy provisions (like a low-interest loan or “wash loan”). And a good track record when it comes to growing cash value. Remember, keeping things simple is the way to go.
There are a lot of companies out there who will push their complex universal plans with a bunch of fancy components and riders. For most people, they are a complete waste of money.
Understand the Premium Rates Planned Out Ahead of Time
Your life insurance policy will have a “target” or “minimum” premium listed on its contract. But you should know right now you will likely be paying more than what is listed.
This is because the minimum premium is only what you will need to pay to keep the policy active— provided the insurance company’s financial estimates are correct.
Therefore, it’s important to plan on paying more than the minimum just to keep yourself (and your policy) protected. Should your insurer’s sales take a nosedive, you can protect your insurance rates from going up.
For most people, they don’t want the uncertainty of not knowing how much their plan will cost.
Decide Which Plan Is Right For You
One thing which confuses a lot of applicants is determining which kind of plan is best for them. There are several, and guaranteed universal life is only one of them.
These plans are so unique so they aren’t going to work for a lot of people. But there are still several other options to choose from.
Let’s look at term life insurance first. These plans are only effective for a specific time frame, which can be anywhere from 5 years to 30 years.
After that point, they are no longer active. Because these plans are not a permanent form of coverage, they are much cheaper.
Consider a No Exam Policy
Another popular option is a no medical exam plan. These plans are going to allow you to purchase coverage without taking the medical exam first.
They are a popular alternative for anyone who doesn’t want to go through the hassle of the medical exam.
One of the best advantages of these plans is that you can get approved for coverage much faster than you can with a traditional life insurance plan.
It’s a no medical exam policy. So you won’t have to wait for the insurance company to review your medical exam results.
With a traditional plan, it could take several weeks, or even a month to get approved for a plan. But with a no medical exam, you can be approved within days.
What keeps most people from buying a no exam plan? The cost. No exam plans are much more expensive.
Life insurance companies are hesitant to offer plans to people who they don’t have medical exam info on. And they are going to charge more because of it.
One of the other reasons everyone doesn’t buy a no exam policy is because they don’t give enough coverage. Most companies cap the policies at $500,000 or less. This isn’t enough protection for most families, and it probably isn’t enough for you either.
Improve Your Health
If high premiums are what’s keeping you from covering your family with life insurance, we can help. Money is one of the biggest concerns when applying for life insurance.
Fortunately, you don’t have to worry anymore. We have a couple of tips you can use to help you get lower rates.
The best tip we offer all of our clients is to wean yourself off any tobacco. Cigarettes, cigars, chewing tobacco, or anything else. Being tobacco-free for one whole year will allow you to snag one of the non-tobacco rates, which is going to be half the price of the other quotes.
The next thing we suggest our clients do is to get in shape. Dragging yourself to the gym or skipping the extra dessert will slim down your waist and slim down your premiums. You’ll have more energy and more money in your wallet.
Closing Thoughts on Universal Life
Not every company has a guaranteed universal life insurance product, but the ones who do are going to have very different premiums and features. You can learn more about different top companies by checking out the reviews we have for your reference, such as our Colonial Penn Review.
If you don’t want to spend the time researching the companies (and we don’t blame you), the best way to gather all of the information is to contact one of our agents.
We are experts in life insurance so you don’t have to be.
To learn more and start getting detailed quotes today, please feel free to contact us at 800-712-8519 or use the quote tool on this page.
We look forward to helping you get the best policy with competitive rates.