Georgia Rose is a lead writer on the international team at NerdWallet. Her work has been featured in The Washington Post , The New York Times, The Independent and The Associated Press . Throughout her career, Georgia has written on a variety of subjects, including personal finance, government policy, science and technology. She enjoys researching complex topics and distilling the information for her readers. Before joining the international team, she wrote for the insurance vertical, specializing in life insurance.
Reviewed by Tony Steuer Life insurance expert Tony Steuer
Life insurance expert | Life Insurance
Tony Steuer is a financial wellness advocate, podcaster and speaker, and the author of "Questions and Answers on Life Insurance." His advice has been featured in media outlets including The New York Times, The Washington Post, Fast Company, Forbes and CNBC. He has a bachelor of science degree in finance from California State University and holds the following designations: Chartered Life Underwriter (CLU), Life and Disability Insurance Analyst (LA) and Certified Personal and Family Finance Educator (CPFFE).
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Assigning Editor Lisa GreenLisa Green leads the life insurance team and oversees insurance-focused data journalism at NerdWallet. A professional journalist since high school, she was an insurance writer at NerdWallet before becoming an assigning editor. Previously, Lisa spent more than 20 years as an editor at The Tennessean in Nashville, where she led business and consumer coverage for several years. At The Tennessean, she was part of a 2011 Pulitzer Prize finalist team for coverage of devastating floods in Middle Tennessee. Her work has also won awards from the Society for Advancing Business Editing and Writing, Investigative Reporters and Editors, and the Society of Professional Journalists. Lisa is an alumna of the Wharton Seminars for Business Journalists at the University of Pennsylvania. She has also studied data journalism with the National Institute for Computer-Assisted Reporting, business editing with the American Press Institute and writing, editing and news research with the Poynter Institute. In addition to her work at NerdWallet, Lisa is a real estate investor and has taught a seminar on how to earn college scholarships. She is based in Nashville.
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Guaranteed universal life insurance, or GUL, is sometimes referred to as the Goldilocks policy. It strikes a balance between term and permanent life insurance that can be cost-effective for consumers.
But this type of coverage makes up only 1% of individual life insurance sales in the U.S., according to the latest data from LIMRA, a life insurance trade group. To compare, term and whole life policies make up 86% of sales. So with such a small market size, is guaranteed universal life the hidden gem of life insurance, or does it fail to deliver the best of both worlds?
Here are five things you should know before buying a guaranteed universal life policy.
Like term life, guaranteed universal life lasts for a set period. But instead of choosing a term length , you choose the age the coverage will end, typically between 90 and 121 years old. Because it is fairly rare to live to the upper end of this age range, guaranteed universal life is essentially considered lifelong coverage.
In some cases, you can choose a younger expiration age, such as 70. The younger the age, the cheaper the premiums because you are more likely to outlive the policy.
You may be able to extend the coverage if you reach the expiration age, but the new premiums could be significantly more expensive.
Cash value accounts are an investment feature of permanent policies like whole life insurance , which funnel part of the premium into an account that grows over time. While guaranteed universal life policies technically have a cash value account, they typically accumulate little cash value.
If you are looking for coverage with significant cash value opportunities, you may want to consider cash value life insurance policies that focus on growth.
Guaranteed universal life insurance is less expensive than permanent coverage such as whole life because it does not prioritize cash value growth. This may appeal to applicants looking for simple, lifelong, affordable life insurance . If you are older and aren't interested in building up an investment, guaranteed universal life provides a way of getting coverage for the rest of your life.
When compared with regular universal life insurance , guaranteed universal life premiums for older applicants are usually lower — this is because the cash value growth is minimal. But a universal life insurance policy requires careful monitoring, which isn’t ideal for those who don’t want to take a hands-on approach
Life insurance rates are generally based on age and health, which means affordable life insurance for seniors can be hard to find. Term life insurance is the cheapest option on the market, but it is often unavailable to applicants in their 80s. And whole life policies can get very expensive later in life.
This is where guaranteed universal life policies can help fill the gap. It tilts toward term rates when term life is no longer available, and it is less expensive than a whole life policy at an older age. Plus, issue ages for guaranteed universal life policies can reach into the 80s, making coverage available to older applicants.
A $100,000 guaranteed universal life policy for an 85-year-old woman costs $883 a month, according to 2024 data from Covr Financial Technologies, a life insurance brokerage. To compare, a whole life policy for the same applicant is $1,420 a month, about 60% higher.
Guaranteed universal life insurance offers a little bit of flexibility, which is part of its appeal.
Similar to other types of universal life, guaranteed universal life offers the ability to adjust the coverage amount, policy length or frequency of payments as your needs change. However, to maintain the policy’s guarantees, you’ll need to pay premiums in full by the due date.
Some policies also come with a return-of-premium rider. Life insurance riders are features you can add to a policy to customize coverage. A return-of-premium rider refunds all or some of the premiums you have paid if you cancel the policy, typically within a specific window of time.
Choosing the right type of life insurance often comes down to your individual needs. Ask yourself why you need coverage. Term life insurance is typically sufficient for young people who are looking to lock down coverage, as well as most families.
However, if cash value growth isn't a priority, and you want a comparatively low-cost coverage solution that is likely to last a lifetime, guaranteed universal life may be worth considering.
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Georgia Rose is a lead writer on the international team at NerdWallet. Her work has been featured in The New York Times, The Washington Post, The Independent and ABC News. See full bio.
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