Guaranteed Universal Life

Benefits

Guaranteed UL policies give you death benefits that you can depend on. Even if the cash value drops significantly, or there is no cash value remaining in the cash value account, the policy will remain in force. This is significant because, ordinarily, insurance costs are deducted from the cash value. If there is no cash value the policy lapses.  Another way to look at Guaranteed Universal Life is as a permanant term insurance alternative; meaning it can be designed to last any amount of years desired, at which time it will lapse, like term insurance. 

Drawbacks

You must pay at least the target premium to keep the policy in force under the guarantees. The target premium is the minimum amount of premium required to keep the death benefit in force. With guaranteed UL, this premium could be more than the minimum premium required on a traditional Universal Life policy.

Considerations

Make sure you understand that guaranteed UL policies are not meant to build cash value. Guaranteed UL policies also have very specific terms that must be met in order for the guarantees to be valid. Generally, premiums must be paid on time and the target premium represents the minimum premium required for the guaranteed death benefit amount.  GUL policies offer no flexibility as the targeted premium must be paid on time or else the guarantees provided are no longer in effect.