1. Coverage is essentially lifelong

Guaranteed universal life, like term life, has a set duration. Instead of selecting a term length, you select the age at which the coverage will expire, which is typically between 90 and 121 years old. Because it is uncommon to reach the upper end of this age range, guaranteed universal life insurance is essentially considered lifelong coverage.

In some cases, you may be able to select a younger expiration age, such as 70. The younger you are, the lower your premiums will be because you are more likely to outlive the policy.

If you reach the expiration age, you may be able to renew your coverage, but the new premiums may be significantly higher.

2. Cash value growth is minimal

Cash value accounts are an investment feature of permanent policies such as whole life insurance that directs a portion of the premium to an account that grows over time. Although guaranteed universal life policies have a cash value account, it does not accumulate enough growth to compete with permanent coverage.

If you want coverage with significant investment opportunities, you should look into cash value life insurance policies that emphasize growth.

3. Premiums are cheaper than whole life

Because it does not prioritize cash value growth, guaranteed universal life insurance is less expensive than permanent coverage such as whole life. This may appeal to applicants looking for straightforward, lifelong coverage at a low cost. According to Ken Toffolo, research council fellow at Aite-Novarica Group, if you are older and don't want to build up an investment, guaranteed universal life provides a way to get coverage for the rest of your life.

Guaranteed universal life premiums for older applicants are comparable to regular universal life insurance premiums. The cash value account in a universal life policy, on the other hand, is more involved, and dealing with the ups and downs of an investment may not be something you want to take on.

4. Coverage can be a good fit for seniors

Because life insurance rates are generally based on age and health, finding affordable life insurance for seniors can be difficult. Term life insurance is the most affordable option on the market, but it is frequently unavailable to applicants in their 80s. Furthermore, whole life insurance policies can become prohibitively expensive later in life.

This is where guaranteed universal life insurance policies can come in handy. When term life is no longer available, it tilts toward term rates, and it is less expensive than a whole life policy at an older age, according to Toffolo. Furthermore, the issue age for guaranteed universal life policies can reach the 80s, allowing coverage to be obtained by older applicants.

According to Quotacy, an insurance brokerage, a $100,000 guaranteed universal life policy for an 85-year-old woman costs $1,134 per month in 2022. In comparison, a whole life policy for the same applicant costs $1,420 per month, or about 25% more.

5. Death benefit and premiums are flexible

According to Scott Holeman, director of media relations at the Insurance Information Institute, guaranteed universal life insurance offers a little bit of flexibility, which is probably what makes it appealing.

Guaranteed universal life, like other types of universal life, allows you to change the amount of coverage, the length of the policy, or the frequency of payments as your needs change.

Some policies also include a premium-return rider. Riders are features that can be added to a life insurance policy to customize coverage. A return-of-premium rider refunds all or part of the premiums you've paid if you cancel the policy within a certain time frame.

Before you buy

Choosing the right type of life insurance often boils down to your specific requirements. Consider why you require insurance. "If you're young, buy term — you can always switch," Toffolo advises. Most families can get by with just term life insurance.

However, if cash value growth isn't a priority and you're looking for a low-cost coverage option that will last a lifetime, guaranteed universal life may be worth considering.