These days all of us are concerned about the well-being and healthy lifestyle of our loved ones even when we are not there. Life insurance policies are one of the safest sides of doing so and no-lapse guarantee universal life insurance is one of its types.
As obvious from the title, you are here to learn about this special policy type and this blog post is all about that. It is one of the insurance plans that has been gaining traction in the insurance market. Its unique properties make it one of the most attractive options for people of many age groups and income levels. The policy fits somewhere in between whole life and term life insurance and possesses the benefits of both policies.
Want to know more about no-lapse guarantee universal life insurance? Read out the article thoroughly to get information about usage, costs, and other aspects of this plan.
What is No-Lapse Guarantee Universal Life Insurance?
A no-lapse guarantee universal life insurance is a perfect plan for those who want lifelong protection with a premium less than whole life insurance. As the coverage offered is a lifetime, premiums will be higher than a term life insurance plan but certainly lower than a whole life insurance policy. So it could be considered a perfect hybrid plan between these two.
This type of universal life insurance is very different from other types of universal life insurance plans. Unlike indexed or variable universal life insurance which has fluctuating premiums and coverage amounts, no lapse is fixed for your entire life. The only way the insurance provider can change your plan is if you don’t pay your premium payment on time and the policy lapses.
Guaranteed No-Lapse Universal Life Insurance
No-lapse guaranteed universal life insurance is sometimes also called “Guaranteed Universal Life”. It offers a death benefit to the policyholder, however, premium payments will not change with time regardless of the policy duration.
Applicants just have to choose an age while the plan ends like age 90, 95, 100, 105. Selecting a higher age will increase the premium of the plan. However, GUL insurance is one of the cheapest types of universal life insurance and it may also come with a minimum little cash value.
What are the key points about no-lapse guarantee universal life insurance?
Here we have gathered some of the key points of no-lapse GUL insurance for better understanding. Let’s have a look!
- Fixed or level premiums are offered throughout the plan.
- The coverage amount of the policy is guaranteed to remain the same.
- The policy is guaranteed to never be canceled or expired until the insured reaches the selected age.
- It is designed as pure life insurance just like term life insurance but guaranteed to pay out.
- The plan builds little to no cash value.
- It is more affordable than term life insurance but less than whole life.
Once your application is approved and you have paid your first premium, your plan is ‘inforce’. Once your policy becomes active or inforce, the insurer can never cancel or change its term like increase the premium amount or lessen the plan amount despite your age and health. So it’s important to get life insurance when you are healthier and younger.
When you have a no-lapse guaranteed universal life insurance plan, you just have to pay your premiums and whenever you die your beneficiary will get the payout. They have to file a claim and the insurance company will give them an income tax-free death benefit plan amount.
What are the advantages of having no-lapse guarantee universal life insurance?
Among many other benefits of having no-lapse GUL plan, here are some of the common ones:
- It covers lifelong debts like home loans or any mortgage.
- The plan gives key person coverage.
- It covers your final expenses and any other outstanding debts after your death.
- Being older if you don’t want term life insurance, you can outlive no-lapse GUL.
- The policy provides instant liquidity to help you cover the estate tax bill.
- It passes tax-free wealth to your children, grandchildren, or any other trustee.
- It offers a guaranteed payout to your partner after your demise, regardless of your age.
- This insurance plan also comes with a buy-sell agreement to have an older business succession.
How much does guaranteed life insurance cost?
The guaranteed life insurance rates or prices vary for each person and insurance company. Because each company has its own rates and underwriting process. Both these things are based on age, health or weight, medical history, family history, and many other criteria. However, the minimum rate for no-lapse GUL is $25K and most insurers go up to $10 million or $20 million. Some insurance providers may even go up to $65 million. Remember that it’s a general estimate that varies according to the insurers and their policies.
The Bottom Line
No-lapse guarantee universal life insurance is a good choice for those who are looking for lifelong coverage and do not care much about the “investment” option of cash value. Moreover, as the policy is neither flexible with the premium payments nor the death benefit amount, you have to go through terms and conditions before buying the plan.
Additionally, you can also consult a professional insurance agent or financial advisor. He can guide you best for your insurance plan and company according to your needs and requirements.