Guaranteed Universal Life Insurance

Guaranteed universal life insurance shares features of both permanent and term life insurance. Policies provide lifelong coverage and a guaranteed death benefit at a price that’s more affordable than other permanent life options. However, cash value accumulation is minimal.

What Is Guaranteed Universal Life Insurance?

Guaranteed universal life insurance is a type of permanent life insurance, which means your policy never expires if premiums are paid.

These policies may also offer some flexibility, such as reducing the death benefit amount in the future if your needs change.

A guaranteed universal life policy may or may not include a cash value component.

If it does, cash value growth is minimal compared to other options, such as whole life or variable universal life insurance.

Key Features of Guaranteed Universal Life Insurance
Affordable Lifelong Coverage
The cost of coverage is cheaper than standard universal life or whole life insurance. That’s because extra money isn’t required to build the policy’s cash value accumulation. Premiums are typically level for the length of the policy.
Return of Premium
Some insurance companies offer a return of premium rider that can be added to your policy. This allows you to take a full or partial refund on the premiums you’ve already paid if you no longer want coverage — but only at specific times. The size of your refund may depend on how much the policy is worth, how long it’s been in place and your age when you first purchased it.
No-Lapse Guarantee
Your rates are guaranteed regardless of your age, health or changes to the market. As long as you pay your premiums, your coverage won’t lapse. However, if you make a late payment or miss one, the policy will likely terminate.
Age Limit on Premiums
Guaranteed universal life policies are structured to last until a specific age (typically 90, 95, 100, 105, 110 or 121). Choosing a higher age will increase your premiums. This is like term life insurance, which offers fixed rates for a specific number of years (such as 10, 20 or 30).

Guaranteed universal life insurance differs from its nonguaranteed counterpart because it accumulates very little — if any — cash value.

With other universal life policies, part of the premium is allocated to a growing cash value account you can borrow against or use to pay future premiums.

The growth of cash value can be tied to current interest rates, market indexes or investments.

These policies are often sold to people who want a hybrid insurance-investment product.

However, like the name implies, the growth of your policy’s cash value is not guaranteed with those policies.

Nonguaranteed universal life insurance tends to be more complex and expensive than guaranteed universal life coverage.

Who Is a Good Fit for Universal Life?

Easy-to-understand lifelong coverage is an attractive feature of guaranteed universal life insurance.

If you want to secure money for your beneficiaries that never expires without paying high premiums to build cash value, guaranteed universal life insurance may be right for you.

Guaranteed universal life insurance might also be a good fit if you:
  • Want to fund a trust.
  • Have a special needs dependent.
  • Have a spouse or underage child who financially depend on you.
  • Own a small business.
  • Have a mortgage or other substernal debt.
  • Need protection against estate tax.
  • Want to leave an inheritance.
  • Have a term life insurance policy that ended but you still want coverage.

How Much Does Universal Life Insurance Cost?

The cost of guaranteed universal life insurance is determined by the interest rate at the time your policy was created.

Because you select the age you want coverage to last until, you will not need to reapply for life insurance later.

Your future health and age will not increase your premiums down the road.

Average Monthly Premiums for Guaranteed Universal Life with $500,000 Coverage
Source: Senior Market Sales

In 2021, a 45-year-old man purchasing a guaranteed universal life insurance policy could expect to pay roughly $5,364 a year in premiums for $500,000 worth of coverage that lasts until age 100.

Meanwhile, a whole life insurance policy would cost him about $6,168 a year and a 20-year term life policy would cost approximately $348 a year.

Guaranteed universal life insurance is often considered the best way to get the lowest quotes for permanent coverage.

Last Modified: February 12, 2021

2 Cited Research Articles

  1. Chorpenning, A. (2020, July 17). Understanding Universal Life Insurance. Retrieved from
  2. Kinney, J. (2020, January 17). What Is Universal Life Insurance? Retrieved from