Guaranteed universal coverage (GUL) can also be known as no-lapse guarantee universal life insurance. It offers a guaranteed demise benefit and premiums which remain the same throughout the policy’s life. GUL policies can be purchased separately from permanent life insurance. But, GUL policies typically have an end date. Policies are typically purchased at an advanced age. This could be 95, 102 or more. The policy will remain in force until the end. GUL policies have a lower cash value than other permanent policies.
It has a cash value that earns interest over time, just like permanent life insurance. You can borrow against the cash value to pay your premiums or use your coverage to cash your retirement income.
In order to see cash value increase, keep paying your premiums on the universal life policy. You will need to make either an upfront premium payment or a fixed monthly rate depending on which policy you choose.
The policy takes effect on the first day. UL can offer an income tax-free death benefit to protect your family's finances. Your coverage cannot be canceled as long as there is a positive cash value.
The exception to this rule is if you borrow against your cash. The loan amount you borrow isn't taxable if you pay the full amount back while your policy remains active. If you borrow more than the cash value (including interest), your policy may be cancelled.
Indexed universal coverage (IUL), allows you earn interest tied to index funds, such as the S&P 500. However your insurer might limit your rate. A fixed-rate account may allow you to earn all of your cash value or a portion.
The premiums, cash growth and death benefit of a whole-life insurance policy are all guaranteed to remain the same. All those things are flexible with UL. The cash value growth will be affected by how much premium you pay. You can also affect your family's inheritance by using cash value funds. It can even lead to your policy becoming invalid. To ensure your policy is still in place, you should contact your financial professional.