An insight into universal life insurance: Why does universal life insurance have such low guarantees?&nbsp

Insurance is one of the most critical documents that every individual needs. Individuals can benefit from several insurance benefits and services. It helps them in need or during any emergency. Universal life insurance is one of the best insurance policies available in the market. 

Universal life insurance provides several benefits and services to the individual. Yet, certain aspects need to be recognized by the individual opting for universal life insurance. 

The benefits of universal life insurance are numerous. It includes death benefits, cash value growth, and a reasonable rate of return. The following article will go through the different criteria for universal life insurance. 

What is universal life insurance? 

Universal life insurance is said to be permanent life insurance. It covers all the benefits related to the death benefits and the cash value components. The universal life insurance policy is considered effective until the individual pays the premiums or is living a healthy life. Universal life insurance is of three types. They are as follows:

  • Indexed universal life
  • Guaranteed universal life.
  • Variable universal life.

Universal life insurance has excellent flexibility plans in comparison to other insurance policies. Moreover, it gives full control to the owner. Thus, the individual or the owner of this insurance policy can lower their premiums. 

Moreover, they can change the death benefits also accordingly. Sometimes, an individual can also focus on the cash value component. It can be very helpful in earning more interest. 

What is the guarantee period on universal life insurance? 

Universal life insurance is considered to last for a certain period. Thus the considerate calculation over the guarantee period of universal life insurance is said to be between 90 and 121 years. 

There are age groups that are considered under universal life insurance. These are considered to be the higher or upper end of the age limit under the significance of the guarantee. 

An individual can increase or decrease the premiums to earn more interest. Under the new versal life insurance, it is considered that the younger the age, the cheaper the premiums will be. 

Why does universal life insurance have such low guarantees? 

Universal life insurance has such low guarantees because of its complex city and low cash Value growth. In universal life insurance, the average return rate is also considered. 

Thus, the average return rate of universal life insurance is 10% to 12%. These return rates make universal life insurance one of the best insurance policies in the market. But the basic reason behind having a low guarantee is the age criteria.

 In universal life insurance, the age criteria are between 90 to 121 years. This age criterion is the primary reason for universal life insurance’s low guarantee. Apart from having a low guarantee, there is also a low chance of cash value growth. 

Yet, universal life insurance provides a flexible plan for the owner. These facilities also make the premiums cheaper and less risky. Is universal life better than whole life? Both universal life insurance and whole life insurance are different from each other. 

But, several facilities and benefits make universal life insurance better. Universal life insurance provides excellent facilities and flexibility to the owner. 

A general list of the differences between both insurance policies is as follows: 

Considering the fact of that cash value growth is essential. The whole life insurance provides an increase in the cash value. But, universal life insurance does not provide good cash value growth.

Universal life insurance provides cheaper guarantees. But, whole life insurance provides expensive guarantees. 

Universal life insurance is quite good for senior citizens around their 80s.

Universal life insurance provides flexibility and total control to the owner. Yet, whole life insurance has limitations regarding death benefits and premiums.

Universal life insurance is complex. When it comes to the documentation of universal life insurance, they are hard to process. At the same time, whole life insurance is simple. 

Difference Between Universal Life Insurance Whole Life Insurance and Term Life Insurance

  Universal Life Insurance Whole Life 
Term Life 
Coverage period Lifetime Lifetime Limited to a specific period (typically 10-30 years)
Premiums Can vary ( Not Fixed ) Fixed Fixed
Builds cash value Yes, but not guaranteed Yes, with guarantees No
Dividends No Yes No
Cost More costly than term insurance; but often less than whole life More costly than term Less expensive than whole life or universal life
Income tax-free death benefit Yes Yes Yes
Investment options Standard – variable – Yes7  Guardian provides options; other companies may or may not No
Primary uses Death benefit for beneficiaries; tax-deferred asset accumulation; tax-advantaged wealth preservation and transfer Death benefit for beneficiaries; tax-deferred asset accumulation; tax-advantaged wealth preservation and transfer Death benefit for beneficiaries 


Q1 – Is universal life insurance worth it? 

Universal life insurance may be suitable if you want flexible premiums and permanent coverage. It is important to note that universal life insurance is typically more expensive than term life insurance, which is adequate for most families.

Q2 – What is the disadvantage of universal life insurance?

Universal life insurance has the disadvantage of paying premiums on the full face value for the policy’s life, regardless of its cash value. As you increase the face value/death benefit over time, the premium would also rise to keep up with the increased coverage.


When acquiring insurance, an individual needs to have all the details. Thus, the universal life insurance policy is one of the best. Moreover, universal life insurance is further classified into three groups.

An individual needs to have the proper knowledge about each of these categories. Universal life insurance is also distinguished through that all the holy life insurance. Certain features, benefits, and services are provided by universal life insurance. It makes it better than that whole life insurance. 

Thus, every individual needs to have complete information about different insurance policies. Additionally, they provide benefits. 

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