A guaranteed universal life (GUL) policy is primarily distinguished from a traditional universal life policy by:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Guaranteed universal life is a universal life product marketed primarily for its death benefit guarantee. It includes a secondary, no-lapse guarantee stating that as long as the policyowner pays the required premium, coverage will remain in force for a specified period, commonly to a target age, even if the cash value falls to zero. Traditional universal life only guarantees coverage while the cash value is sufficient to cover monthly charges. GUL therefore functions like term protection with a permanent-policy structure and predictable premiums, making it popular for funding permanent needs where cost certainty matters.
Why the other options are wrong
- B) Separate-account investment features describe variable or variable-universal life, which carries investment risk and policyholder control of the subaccounts. GUL has no separate account and makes no such investment guarantee.
- C) GUL premiums can be adjusted within limits; the defining feature is the secondary guarantee rather than a locked, non-adjustable premium. Flexibility remains a universal life trait even in GUL.
- D) GUL is generally nonparticipating; dividends are a feature of participating whole life, where policyowners share in the insurer's surplus. A dividend feature is not what distinguishes GUL from traditional UL.
Memory hook
GUL: pay the required premium and coverage is locked in—even if the cash tank runs dry.