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Term life insurance is a great option for most families. Typical families need life insurance protection for a specific period of time. Term life insurance offers this.

For example, term life insurance provides coverage for when you start a family and lasts until your children are independent, or coverage for when you buy a house and lasts until your mortgage is paid off. Term life insurance is simple and affordable.

However, not everyone seeks life insurance that only lasts a specific term length. Perhaps you need life insurance protection your entire life.

If you will have estate tax issues, such as estate or capital gains taxes, if you own a business or have a special needs dependent, these are cases in which you want to provide a lifetime death benefit.

Or perhaps you purchased a term life insurance policy when you were younger and now are looking for more coverage. Our lives are full of change. It’s not uncommon to get term insurance and then later in life need permanent coverage.

Permanent life insurance provides a lifetime death benefit, but also typically comes with a hefty price tag. Permanent life insurance can’t fit in all budgets. This is when guaranteed universal life insurance is a good option.

Guaranteed universal life insurance is a nice blend of whole life and term life insurance features.

Guaranteed Universal Life Insurance Features

  • Lifelong death benefit (like whole life)
  • Low cost option (like term life)

Some guaranteed universal life insurance policies have cash value accumulation, but the growth rate is nowhere near that of a whole life insurance policy. Guaranteed universal life insurance exchanges cash value growth for affordable premiums.

If you’re looking for affordable life insurance protection that lasts your entire life, consider guaranteed universal life insurance.

Want to see what you would pay for Guaranteed Universal Life Insurance?

Click the “Get Started” button below, enter basic info (zip, gender, birthdate), and follow these simple steps.

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Choose “Forever” for length
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Comparing Term, Guaranteed UL, and Whole Life Insurance

Applicant: 50-Year-Old Healthy Non-Smoking Male
Coverage (Death Benefit) Amount: $500,000
Type of Policy:Term Life (35-Year Term)Guaranteed Universal LifeWhole Life
Estimated Monthly Rate:$217.52$546.19$1,128.19

Let’s talk about the policies shown in the table above.

Term Life Insurance

The longest term length available for a 50-year-old is 35 years. Very few carriers offer this term, but it is available if you work with Quotacy. We work with 25+ life insurance carriers.

The majority of term length offerings range from 10-30 years.

A healthy 50-year-old non-smoking male can purchase a 35-year $500,000 term life insurance policy for an estimated $217.52 per month. Term life insurance policies are fixed. This means his $217.52 monthly premium will never increase during that 35-year term.

With this policy, if he dies unexpectedly within the next 35 years, his family receives a $500,000 death benefit check from the life insurance company. If he is alive after 35 years, the policy terminates and coverage ends.

With term life insurance, it’s simple temporary protection. There is no cash value. No dividends. No refunds.

You may not need term life insurance coverage for 35 or 40 years. Shorter term lengths will have cheaper premiums. And, of course, the younger you are when you purchase, the cheaper the premiums would be as well.

Applicant: 50-Year-Old Healthy Non-Smoking Male
Coverage (Death Benefit) Amount: $500,000
Term Length:10 Years15 Years20 Years25 Years30 Years35 Years40 Years
Estimated Monthly Rate:$44.62$54.36$71.43$103.20$128.12$217.52N/A for age 50

Guaranteed Universal Life Insurance

If you need lifelong life insurance coverage but whole life insurance premiums are too expensive, then guaranteed universal life insurance is ideal.

While guaranteed universal life insurance policies may have cash value accumulation, it’s not a major feature. These policies are primarily designed as affordable long-term coverage.

A healthy 50-year-old non-smoking male can purchase a $500,000 guaranteed universal life insurance policy for an estimated $546.19 per month. With this setup, he’s paying fixed premiums each month until he dies. When he dies, his family receives the $500,000 death benefit. The premiums will never increase if he pays this fixed amount whether he dies at age 31 or 91.

Flexible Premiums: Optional Feature

With guaranteed universal life insurance, there is an option for flexible premium payments. You can choose to pay a fixed premium for your lifetime, for a certain period of time, or adjust the premiums as your income changes.

The easiest and most manageable option is to simply pay a fixed premium for your lifetime. This ensures all of your benefits remain intact and your beneficiaries will have a guaranteed death benefit payout when you die.

Some guaranteed universal life insurance policies also have lapse protection. With this feature, if you can’t pay the premium or forget once or twice, your guaranteed universal life insurance policy won’t get canceled. However, the length of your guaranteed protection may be impacted if payments are skipped.

Flexible Face Amount: Optional Feature

With guaranteed universal life insurance, you also have the option to decrease your face amount (the death benefit) after the policy has been active for a certain period of time (example: three years). The total face amount must not drop below the minimum required amount (typically $100,000).

This option is beneficial to those who need to decrease their premiums or for those who simply don’t need as much coverage anymore. For example, if you purchased a $500,000 guaranteed universal life insurance policy at age 30, you may no longer need $500,000 of coverage once you’re in retirement. Your kids are grown and your mortgage is paid. You can choose to lower the face amount and pay lower premiums for the remainder of your life.

If you’re interested in life insurance benefits such as cash value accumulation and dividends, guaranteed universal life insurance isn’t for you. This is a permanent life insurance policy that has features more related to term life insurance.

But if you’re looking for affordable life insurance protection that lasts your entire life, consider guaranteed universal life insurance.

Whole Life Insurance

Whole life insurance is the most well-known type of permanent life insurance. It’s guaranteed to last your entire (whole) life as long as the premiums are paid.

A healthy 50-year-old non-smoking male can purchase a $500,000 whole life insurance policy for an estimated $1,128.19 per month. With this setup, he’s paying fixed premiums each month until he dies. When he dies, his family receives the $500,000 death benefit.

The premiums will never increase if he pays this fixed amount whether he dies at age 31 or 91. However, you have the option of using your cash value, through policy loans, or dividends, if your policy earns dividends, to pay or reduce your premium payments.

Cash Value Growth

A portion of the premium payments goes into an account that builds cash value. The cash value of a whole life insurance policy grows at a guaranteed rate set by the insurance company. Its growth isn’t tied to the stock market; therefore, there is no risk to your cash value growth. It grows at a slow, guaranteed rate.

The cash value that accumulates can be used as surrender values, paid-up insurance, or extended term insurance. You can also take out policy loans against the cash value and make partial withdrawals.

Earning Dividends

Some whole life insurance policies are “participating”. If you buy a participating whole life insurance policy, you participate in favorable investment earnings and mortality savings by the insurance company. These favorable earnings come in the form of dividends.

Participating whole life insurance policies have slightly higher premiums than non-participating whole life insurance policies. This is because the insurance companies have intentions to return part of the premium in the form of dividends. However, dividend amounts cannot be guaranteed.

Most families do not need whole life insurance. Term life insurance is typically adequate for financial protection as long as you’re investing elsewhere for your future and emergencies.

There are scenarios in which permanent protection is beneficial, however. Learn more in our whole life insurance guide.

Not sure what type of life insurance you need? Contact us to speak to an advisor. We’ll provide unbiased suggestions and help you through the buying process.

All set to buy term life insurance or guaranteed universal life insurance? Our life insurance quoting tool is easy to use and you can see estimated pricing instantly. Choose a specific term length or choose “Forever” for guaranteed universal life insurance.

Note: Life insurance quotes used in this article accurate as of March 25, 2021. These are only estimates and your life insurance costs may be higher or lower.

 

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius

Marketing Content Manager

Natasha is a writer and content editor at Quotacy. She is also co-host of Quotacy’s YouTube series. She can't get enough of life insurance and outside of work is also working toward her Chartered Life Underwriter designation. Connect with her on LinkedIn.