What is 'Group Universal Life Policy (GULP)'

A group universal life policy is universal life insurance offered to a group that is less expensive than what is typically offered to an individual. A group universal life policy is most commonly purchased by businesses looking to provide life insurance coverage for their employees.

BREAKING DOWN 'Group Universal Life Policy (GULP)'

Buying a group universal life policy is similar to buying food in bulk. The cost to cover each individual is cheaper because the policy is designed to cover a large group, just as purchasing a large amount of a particular grocery item is cheaper on a per item basis than buying each item separately.

A group universal life policy is a type of permanent life insurance that features a savings component. Employees may choose to pay only the cost of insurance premium or to make additional payments to the cash value of a policy, which can be accessed through loans or withdrawals. These additional sums are allocated to a guaranteed account, which earns a minimum fixed interest rate for cash value growth. 

A GUL provides flexible premium payments and reliable cash value growth tied to a fixed interest rate, offering stable growth over time. Generally, a policy begins to accumulate cash value after about a year, and the amount of cash value usually increases every year thereafter. Cash value is available for withdrawal at any time – at any age – generally without tax penalties. A policyholder may also choose to leave it in the policy and allow the cash value to grow. Employees can start, change or stop additional premiums at any time, without charge. Policyholders also get the convenience of making contributions via payroll deductions, or they may contribute any lump sum in addition to their premiums. A GUL provides a death benefit plus an optional cash accumulation account. 

    A group universal life policy can also receive dividends. The amount of a dividend is set by a company’s board of directors each year and are not guaranteed. When a dividend is payable, a policyholder can take it in cash, use it to purchase more insurance, or use it to pay or reduce premiums. The dividend a policy earns fluctuates from year to year and is not guaranteed.

    Group Universal Life Policy Living Benefits

    Employers can choose to offer living benefits, including:

    • Portable coverage that allows employees to continue coverage when they change jobs or retire
    • Accelerated benefit to employees upon diagnosis of a terminal illness
    • Waiver of premium if an employee becomes totally disabled
    RELATED TERMS
    1. Term Life Insurance

      Term life insurance is a type of life insurance that guarantees ...
    2. Permanent Life Insurance

      Permanent life insurance refers to plans that do not expire, ...
    3. Needs Approach

      Needs approach is a method of calculating how much life insurance ...
    4. Add To Cash Value Option

      An add to cash value option is a life insurance policyholder's ...
    5. Yearly Renewable Group Term Insurance ...

      Yearly renewable group term insurance is a type of life insurance ...
    6. Policy Loan

      A policy loan is issued by an insurance company that uses the ...
    Related Articles
    1. Retirement

      Beware the Sneaky Math of Universal Life Insurance

      Universal life insurance's cash value can be a cash cow – if there's any left. Read on to see if it'll work as an income source after you've retired.
    2. Financial Advisor

      Pros and Cons of Indexed Universal Life Insurance

      Indexed universal life insurance has its pros and cons. Here's what you need to consider before purchasing a policy.
    3. Insurance

      How Cash Value Builds in a Life Insurance Policy

      If you have permanent life insurance, more of your insurance premium goes to cash value in the early years of your policy.
    4. Insurance

      Should You Buy Term or Permanent Life Insurance?

      When choosing between term or permanent life insurance you'll need to consider these factors.
    5. Insurance

      How Life Insurance Can Provide Retirement Income

      Universal life insurance can generate tax-free retirement income. Here's how.
    6. Insurance

      What Is the Best Age to Get Life Insurance?

      Learn about the optimal time for purchasing personal life insurance and why delaying the buying decision may have costly consequences.
    7. Financial Advisor

      7 Issues to Consider When Determining Life Insurance Coverage

      Seven issues to consider when buying life insurance to ensure the coverage is tailored to meet your personal financial situation.
    8. Insurance

      3 Easy Ways to Save Big on Life Insurance

      Buying life insurance can be a tricky process. Here is some guidance for new and existing policies.
    9. Insurance

      How Good of an Investment Is Life Insurance?

      Compared to other options, does it ever make sense to include cash-value life insurance in your investment portfolio? A look at the pros and cons.
    Trading Center