There are many different variations of life insurance policies available, for example first to die, survivorship, term, universal and whole life policies. Each type of “no lapse” guarantee insurance policy has its benefits and drawbacks. The focus of this article is the guaranteed universal life insurance policy and, specifically, when the policy is owned by a trust, ensuring compliance with both the policy and trust terms.
Premiums paid for guaranteed universal life insurance policies are more expensive than the premiums for term life insurance but less costly than premiums for whole life policies. The primary benefits of guaranteed universal life insurance policies are: (1) that the premiums are level for the life of the policy which may extend until the insured reaches a specific age (hypothetically age 100), and (2) the death benefit will not decrease. Such no-lapse guarantees make these policies popular. Unfortunately, such benefits may be easily lost without close adherence to all the requirements of the policy, including “timely” payment of premiums.
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