5 Items to Consider Before Buying a Guaranteed No-Lapse Universal Life (GUL) Insurance Policy

5 Items to Consider Before Buying a Guaranteed No-Lapse Universal Life (GUL) Insurance Policy

Even considering the risks, the relative inflexibility, and the potential missed up-side opportunity with NLUL, some consumers will find the low-priced guarantee desirable. Those who proceed to shop for this product should carefully follow these guidelines and consider independent and objective assistance in doing so: Check the policy language and determine the consequence of a missed premium payment and the means of determining whether a policy premium has been paid on time. Generally, agents do…

Read More

Alternatives to Owning Guaranteed No-Lapse Universal Life (GUL) Insurance

Alternatives to Owning Guaranteed No-Lapse Universal Life (GUL) Insurance

Term insurance offers lower guaranteed premiums, but even with thirty-year level-term plans, coverage usually ceases before the term of the insured’s life expectancy. Insurers generally will not issue thirty-year level-term policies after age fifty, so term policies generally cannot provide the lifetime guarantees of NLUL. Whole life offers lifetime guaranteed premiums, but with the added expense of high guaranteed cash value. Whole life premiums can be one-and-a-half to two-and-one-half times that of a NLUL premium….

Read More

The Tax Implications of Owning Guaranteed No-Lapse Universal Life (GUL) Insurance

The Tax Implications of Owning Guaranteed No-Lapse Universal Life (GUL) Insurance

The income tax rules for NLUL policies are virtually identical to the tax rules for UL policies, which are essentially the same as the tax rules for other types of life insurance policies. Beneficiaries receive death benefits that, usually, are free of any federal, state, and local income tax. NLUL policies also are subject to the same estate, gift, and generation-skipping transfer taxation rules as all other types of life insurance policies. Although the income…

Read More

5 Disadvantages of Guaranteed No-Lapse Universal Life (GUL) Insurance

5 Disadvantages of Guaranteed No-Lapse Universal Life (GUL) Insurance

Understanding disadvantages that come with any policy can help in making better financial decision. This article explains 5 of the major disadvantages of Guaranteed No-Lapse Universal Life Insurance. Lack of Flexibility. Any changes to NLUL policies such as loans, partial withdrawals, changes in the death benefit, changes in scheduled premiums, and adding riders may terminate the guarantee or reduce its duration. In most cases, policyowners may make additional payments to place the guarantee back into…

Read More

Advantages of Guaranteed No-Lapse Universal Life (GUL) Insurance

Advantages of Guaranteed No-Lapse Universal Life (GUL) Insurance

The secondary guarantee of NLUL policies promises policyowners that if they play by the rules and maintain timely specified premium payment levels, their policies will maintain at least a level death benefit without ever requiring an increase in premiums for the insured’s lifetime, even if the cash value account balance falls to zero or below. However, this promise comes with considerable tradeoffs in costs, other risks, and flexibility. There are several advantages from a design…

Read More

When to Own Guaranteed No-Lapse Universal Life (GUL) Insurance

When to Own Guaranteed No-Lapse Universal Life (GUL) Insurance

Among all policy types, NLUL can provide policyowners with the lowest guaranteed premium for a given guaranteed death benefit for an extended period of time. Therefore, the use of NLUL policies would be indicated for clients: whose foremost goal is to obtain liquidity at death while optimizing the death benefit relative to premiums paid and who, therefore, have less interest in or need for cash values for lifetime income purposes; interested in eliminating performance risk…

Read More

How Does Guaranteed No-Lapse Universal Life (GUL) Insurance Work?

How Does Guaranteed No-Lapse Universal Life (GUL) Insurance Work?

Secondary Guarantee The reason the guarantee feature is called a “secondary guarantee” is that it provides an additional guarantee above and beyond the primary guarantees that are part of all regular UL policies. The primary guarantees apply with respect to the maximum expense and mortality charges that the insurer can debit and the minimum interest rate that the insurer must credit to policy cash values. Regular UL policies will lapse if premium payments are insufficient…

Read More

An Introduction to Guaranteed No-Lapse Universal Life (GUL) Insurance

An Introduction to Guaranteed No-Lapse Universal Life (GUL) Insurance

Briefly, Guaranteed No-Lapse Universal Life (GNLUL or just NLUL), also called guaranteed universal life, Secondary Guarantee Universal Life (SGUL), universal life with secondary guarantees, or other variations thereon, is a variant of the regular universal life design. The no-lapse feature is a secondary guarantee promising owners that their policies will remain in force and pay death benefits so long as they continue to meet the secondary guarantee requirements (essentially, to pay required minimum premiums on…

Read More