Guaranteed Universal Life

The main benefits of a Guaranteed Universal Life Insurance policy are clearly stated in the product’s name — its guaranteed value and its lifetime coverage. This type of policy’s value is evident in these features:

• It combines the permanent coverage of whole life insurance with the lower cost of term life insurance.

• A client can customize coverage periods to last well beyond traditional term life periods.

• The premiums don’t change from year to year — and will never increase as long as they’re paid on time.

• It is usually a more affordable insurance option because the policyholder isn’t paying to fund the cash value.

Any excess from premium payments — above the current cost of insurance — is added to the cash value of the policy. This cash value is credited with interest each month, and usually has a contractual minimum rate.

Some of the most common uses for these kinds of life insurance policies include:

• Use as alternative to term life insurance, whole life insurance, annuities, or maximization of pension or annuities.

• Use as an alternative to life insurance retirement plan or Roth IRA = Especially appealing for high-income earners who want an additional tax shelter (with potential creditor/predator protection) who have maxed out their IRA, who are not eligible for a Roth IRA, and who have already maxed out their qualified plans.

• Final expenses = Such as funeral, burial, and unpaid medical bills.

• Use as an alternative to long-term care insurance = Where new policies have accelerated benefits for long-term care.

• Income replacement = To provide for surviving spouses and dependent children

• Debt coverage = To pay off personal and business debts, such as a home mortgage or business operating loan

• Estate liquidity = When an estate has an immediate need for cash to settle federal estate taxes, state inheritance taxes, or unpaid income taxes on income in respect of a decedent (IRD).

• Estate replacement = When an insured has donated assets to a charity and wants to replace the value with cash death benefits.

• Business succession and continuity = For example, to fund a cross-purchase or stock redemption buy/sell agreement.