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Nuts and Bolts

Fixed Universal Life Insurance and Guaranteed Universal Life Insurance

In the late 1970’s, bank savings rates (CDs) were well into the double digits, which made the relatively lower cash value growth rates offered by whole life companies appear inferior to what the client could get elsewhere.  What happened as a result was that consumers were either cashing out their whole life policies to redeploy the cash value with the banks, or consumers were “buying term and investing the difference”.  This process is called “disintermediation”.  The traditional intermediaries of insurance companies were being excluded as consumers sought the higher interest rates (from the banks) of the time.

The insurance carriers’ answer to the “disintermediation” problem was Universal Life Insurance. The first Universal Life Insurance policy was released in 1979 by EF Hutton.  This policy was a “Fixed UL Policy” where consumers could get growth on their cash value based off the rates that the carriers can declare every year.  It was not uncommon to see illustrations at 12% in the early 1980s because of the interest rate environment. 

These new fixed/current assumption UL policies not only offered higher interest rates based off the current environment (current assumption), they also had no premium mandates, which was very unique to the more senior Whole Life design.  The Universal Life Insurance design was such – and still is – that if you had enough cash value to support the monthly policy charges, than no premium is required.  Considering the interest rate assumptions at the time, many agents sold these policies as the client having to pay very little premium for a few years than the higher “projected rates” would support the policy from that point on.  The phrase used was “vanishing premium”.

After many policies failed as interest rates dropped and after the resulting lawsuits, carriers came out with “Guaranteed Universal Life” which provided (and still do) GUARANTEED DEATH BENEFITS.  The guaranteed death benefits, also known as “no-lapse benefits” give the consumer a guarantee that as long as he/she pays the premium, the death benefit will remain in force.  These GUL products are great solutions for consumers looking for PERMANENT but CHEAP death benefit coverage.  We also refer to GUL as “Perm Term”.   

What makes a “GUL” a “GUL” is the presence of a no-lapse guarantee as well as – in most cases – almost no cash value.

What is GUL?

What is a No – Lapse Provision

When and Why Universal Life Was Created

GUL:  What is the Ideal Client?

What is Fixed UL/Current Assumption?

Sales Ideas

Ben Feldman would say that life insurance allows an owner of a policy to pay pennies for a death benefit that is equal to dollars.

Term for Older Ages and 20% Returns (Effectively)

Stop the Fluff

What is “Pension Max”?

GUL:  Not Just “Death Insurance”

GUL Versus Term Example:  Client Video

Explaining Term Versus Perm

GUL and Estate Planning

Estate Taxes and Life Insurance

Living Benefit Riders:  Living Benefits are a hot topic!  Life Insurance, Not Death Insurance!

GUL:  Not Just “Death Insurance”

Living Benefit Riders:  The Discounted Death Benefit Design

3 Different Types of Chronic Illness Riders

Technical & Actuarial:

What is “Target Premium”?

What is “Target Premium”?

What Impacts Target Premium?

Benefits of MVAs, Limited WDs, etc.

Case Design:  GUL versus Whole Life, GIUL, etc.

The “Internal Rate of Return” printouts that many companies have in their illustrations is a great tool to demonstrate the tax-free death benefit leverage of Life Insurance, especially GUL.

Comparisons:  GUL Versus Whole Life Versus GIUL

Consider GIUL!

How do you find the most attractive “perm-term”??  Technology!

Illustrating GUL in Ipipeline

Internal Rates of Return:  You can use this spreadsheet to determine IRR on DBD

Life Insurance Taxation:  Education on various tax topics.  Know your taxes!!!


With Cash Value Life Insurance you are paying taxes on the seed, but not the harvest...

Post Section 7702 Change Illustrations

What is a MEC?

Changes To Section 7702

Estate Taxes and Life Insurance

Consumer Video:  Taxes and Life Insurance

Tax Risk if a Policy Lapses

Are Cash Dividends Taxable?

Article:  Changes To Section 7702:  Cramming More Money Into Life Insurance

Whitepaper:  Biden's Tax Plan

2021 Contribution and Income Limits

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