When we explain the difference between term and permanent life insurance, most clients like the permanent aspect, but may not be able to afford the premiums.   The next question inevitably is, “what is the least expensive type of permanent life insurance?”.  The answer would be guaranteed universal life.     Guaranted UL is basically funding a universal life plan at the most minimal level, to keep it in force until age 100 or 121.   This type of plan doesn’t build much, if any cash value.   It can almost be considered a permanent type of term insurance.

Most carriers offer this type of permanent plan to consumers.   It is a good idea when buying term insurance to make sure the insurance carrier has conversion options and what they are.  Conversion options are the ability to convert all or part of your term life insurance to a permanent plan, with no proof of insurability.   For example, if you have a 250,000 term policy and you want $50,000 to become guaranteed UL , then you can just fill out the paperwork and its done.    Guaranteed UL is the cheapest way to get permanent life insurance, but often the long term benefits of whole life and universal life can outweigh it.   While it may require more premium with a whole life, it can eventually be self sustaining with big enough dividends.  Also, the cash value from a UL or whole life can be used to buy and invest as you go along in your life.    They both can provide a tremendous amount of supplemental tax-free retirement income with a permanent death benefit.