FIG Marketing
  • FIG News
    • Events
    • Press
    • Community Relations
  • Product R + D
  • Marketing + Branding
  • Business Development
  • Industry Insights

FIG Marketing

  • FIG News
    • Events
    • Press
    • Community Relations
  • Product R + D
  • Marketing + Branding
  • Business Development
  • Industry Insights
Product R + D

IUL vs. GUL: Which Makes the Most Sense?

written by Scott Hall March 18, 2021
IUL vs. GUL: Which Makes the Most Sense?

Nearly five years ago, I wrote an article sharing my take on the state of guaranteed universal life (GUL) products and how they stack up against IUL products. At the time, it was the classic “GUL vs. IUL” debate.

Back then, carriers were slowly shifting gears from these tried and true “permanent term” plans into more flexible, protection-based IUL products. These new products promised comparable premiums, conservative cash value growth, and guarantees to life expectancy.

Protection IUL vs. Traditional GUL

In 2016, carriers like Protective Life and Global Atlantic were touting this design as unique and different. At the time, that was entirely true. But soon enough, more and more carriers were offering a similar product until every major player had an offering in the space. Some created an entirely new IUL product to add to their portfolio. Others managed to add a rider or benefit to their existing product to accomplish the same effect.

Flash forward to 2021, and the protection IUL has supplanted much of the traditional GUL business that was being written five years ago. Carriers seem to be encouraging this, with several offering the same guarantees in their IUL product that they do in their GUL. On top of that, several key players have stopped offering GUL policies altogether. We’ve been slowly watching the decline of a decades-old industry staple.

But is that a bad thing? I don’t think so.

Related: Finding the Right Indexed Universal Life Insurance Policy

Flexibility of IUL and GUL Policies

hands cupping a family life insurance gul vs iul blog post

At its core, universal life insurance was designed to provide more flexibility than the rigid structure of a whole life contract. GUL policies fly in the face of this. Because GUL contracts rely on shadow accounts for their calculations, a missed premium can be catastrophic to the plan.

While universal life has a cash-value account, GUL is designed to exist with a $0 account balance. A missed premium doesn’t have a safety net to catch it. Instead, the carrier reduces the guarantee duration to account for any mistake.

It turns out that GUL is only guaranteed if you follow a very rigid structure for the life of the policy. Which for many people, is a commitment of 40 years or more. A client may remember to pay their premiums on time now when they’re 55, but it gets trickier when they’re 95. Plenty can change in 40 years. Most people need more flexibility than a GUL can offer, making protection IUL an attractive choice.

Related: A Look at IUL Fees, Costs, and Illustration Manipulation

Product Evolution Affecting IULs and GULs

As carriers began to refine these products, we start to see protection IULs beat GULs on premium as well. If you can buy the same death benefit and the same guarantees for a cheaper premium, why wouldn’t you? On top of that, you get a cash account tied to an index allowing for realistic cash growth.

Sure, it may not compete with an over-funded, accumulation-oriented product, but that isn’t what we’re trying to accomplish. The cash in that policy is going to act as the safety net that isn’t possible with a GUL.

Missed premiums are never a good thing, but if a client has cash in their account to cover policy costs, then you can rest easy knowing that your guarantees won’t evaporate overnight.

Final Point of the IUL vs. GUL Debate

The odds are stacking up against guaranteed universal life. Five years ago, I shared where I thought the industry would go with death-benefit-focused life insurance products. And for the moment, it looks like my predictions are coming true.

Sure, there are still plenty of improvements we can make in the space, but it feels like we’re going in the right direction.

It might mean the death of the GUL, but you won’t catch me crying over it.

Keep Reading: Imagine the Future of Life Insurance Illustrations


financial independence group logo

The content within this presentation is for educational purposes only and does not represent legal, tax or investment advice. Customers should consult a legal or tax professional regarding their own situation. This presentation is not an offer to purchase, sell, replace, or exchange any financial product. Insurance products and any related guarantees, features and/or benefits are backed by the claims paying ability of an insurance company. Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results.

IUL vs. GUL: Which Makes the Most Sense? was last modified: March 19th, 2021 by Scott Hall
Guaranteed Universal LifeGULIndexed Universal LifeIULIUL vs. GULlife insurance
1
LinkedIn Facebook Twitter

You may also like

Solving for Aviation Risk & Premium Finance [Case...

April 28, 2022

7 Thoughts to Share With Those Anxious About...

January 20, 2022

Fixed Index-Linked Annuities Can Be a Safe Harbor

January 6, 2022

F&G Trailsetter℠ & The Future of Life Insurance...

December 16, 2021

FILA vs. RILA: Where Do They Fit in...

December 9, 2021

What to Know About Hybrid Long-Term Care Annuity...

November 18, 2021

What is Fixed Index-Linked Annuity (FILA) and How...

October 28, 2021

The Rise of Insurtech: Arming Advisors with a...

October 11, 2021

A Deep Dive into FILA Mechanics

August 9, 2021

Finding the Right Annuity for Your Clients

July 29, 2021

FIG Marketing ElevateU Charlotte - June 2022

quinci powered by simon side ad

Keep in touch

Facebook Twitter Instagram Linkedin Youtube

BLUEPRINT SUBSCRIPTION

Enter your email address below to subscribe to this blog and receive notifications of new posts.


Thank you for subscribing!

Suggested just for you

  • What are the Charges Deducted from Indexed Universal Life Policies? [Infographic]
  • 23 Crucial Years & 10 Birthdays That Impact Retirement Income
  • A Look at IUL Fees, Costs, & Illustration Manipulation
  • The 4 R's of Managing a Successful Business
  • PRESS RELEASE: Barnabas Capital Announces Head of Structured Products
  • IUL vs. GUL: Which Makes the Most Sense?
  • 4 Steps to Naming a Financial Services Company
  • The Emergence of the Fixed Index-Linked Annuity (FILA)

retirement inside out side ad

financial independence group GIFT initiative donor-advised fund side ad

Tags

advisor marketing annuities Annuity Annuity Awareness Month branding business consulting Business Development business management business tips Care Planning Case study client communication Client Relations client relationships compliance Digital marketing DOL financial advisors Financial Independence Group fintech fixed index-linked annuity Fixed indexed Annuities infographic Investment and securities IUL life insurance Life Insurance Awareness Month Long term care Long Term Care Insurance LTC LTC Awareness Month marketing strategies marketing tips Press Release prospecting recruiting Retirement sales idea Sales tips social media surge Surge Business Consulting talent solutions Technology website
  • Facebook
  • Twitter
  • Instagram
  • Linkedin
  • Youtube

1-800-527-1155
Our Products Are Strong, But Our Strength Is In Our People.®

Privacy Policy | Terms of Use | Mobile App Privacy Statement

© 2022 Financial Independence Group, LLC. All Rights Reserved.


Back To Top
Subscribe to the FIG Blueprint

Enter your email address below to receive content as soon as it comes out.

Thank you for subscribing!