Call: 203-637-6655 or email – Kyle Shepard

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November 6, 2018

November 6, 2018 Posted by: Category: Life Insurance No comments

Many people use Term or Temporary Insurance products to meet their life insurance needs. It can be a cost effective way to meet coverage requirements. But term policies, at the end of the coverage period expire, or reset at a new premium, usually at an unacceptable renewal cost. GUL, guaranteed universal life insurance is a solid alternative to coverage that expires in that it lasts until age 100, even longer if you choose.

Here is what you should know!

Buying a life insurance policy that lasts 10, 20, or even 30 years could be a perfect answer for coverage needed, at an affordable price for the critical years of need. Unfortunately, being dependent on Term life insurance has a future cost. Coverage runs out! At a time when you are closer to “the end”, you lose your coverage. If you would like to continue some of that coverage it comes at a hefty price tag.

GUL, Guaranteed Universal Life might be a solution.

Initially you may be implementing Life Insurance to cover a mortgage and or future income for your family. When you fast forward 20+ years your mortgage is mostly paid off and your kids are out of college. So the amount of coverage needed drops significantly. But keeping some coverage is valuable, and term insurance does not give you that option.

GUL, is essentially Term insurance to age 100. So coverage remains in place until that day comes. You pay the premium, your beneficiaries get paid, it doesn’t matter when.

Term insurance has its place in meeting financial needs. But we recommend that you include 25% of the total in permanent insurance to give yourself the option of keeping “some” coverage as a hedge against the Term coverage that will expire!

If you would like to explore GUL, we can assist.

Low interest rates: for a significantly long period low interest rates have had a serious impact on the investment results of permanent life insurance contracts.

Older contracts should be stress tested: New contracts have been injected with a guarantee of the death benefit to the investment performance concern. But Guaranteed Life comes with some hurdles. Guarantees are set to keep the contract in place to age 100, and in some instances age 125.

But:

  • Premiums need to be paid on time. Is there a chance an 80 year old policy holder might be late or miss a payment?
  • There is no skipping premiums
  • Cash value, if any, disappears early and cannot be used as a back stop

An end result of an insured’s policy inadvertently lapsing is a concern, and steps should be taken to prevent this outcome.

If you have a policy needing stress testing or clarification of the term of a guarantee, Shepard Insurance can help. Contact me at 203-637-6655 or email sshepard@shepardinsgrp.com for a full policy review.


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