Confirm whether you own indexed universal life or guaranteed universal life before you do anything else, because the two products fail in opposite ways and the remedies do not overlap. An indexed policy fails slowly, from the inside, as index credits come in below the illustrated rate while cost of insurance charges accelerate with age. A guaranteed universal life policy usually fails suddenly, from the outside, because a premium arrived three weeks late in 2019 and quietly shortened a lifetime guarantee by seven years without anyone being told in terms they understood.
This distinction matters especially with Banner Life. The company built its business on fully underwritten level term distributed through independent brokerage, and its permanent lineup has historically been guarantee-oriented rather than accumulation-oriented. Legal & General America narrowed its product focus toward term in recent years. So a Banner policy that someone describes as “indexed” turns out, more often than not, to be a guaranteed universal life contract with a secondary guarantee — a product whose entire value rests on a payment schedule most owners were never told to treat as sacred.
Read the schedule page, establish which one you hold, and then follow the corresponding track below. The good news is that both tracks start with the same free document request.
In This Article
- Telling the two products apart in five minutes
- If it is guaranteed universal life: the payment schedule is the product
- If it is indexed: caps, participation, and the credited-versus-illustrated gap
- Illustration history: why the issue year matters
- The documents to request, tailored to which product you hold
- Banner Life, William Penn, and a permanent block that is closed
- Deciding what to do
- Frequently Asked Questions
Telling the two products apart in five minutes
Pull the schedule page and the most recent annual statement, and look for these markers.
Indexed universal life shows named index accounts, a cap or maximum crediting rate, a participation rate, a guaranteed floor of usually zero percent, and a segment structure with dates on which money enters and leaves index buckets. The annual statement will report an index credit for the year, and that credit will vary.
Guaranteed universal life shows something different and more important: a no-lapse guarantee, secondary guarantee, or death benefit guarantee provision, usually with a guarantee period expressed as a date or an attained age. Very often the account value on a GUL is small or approaching zero by design, because the product is not built to accumulate. It is built to guarantee a death benefit for a fixed premium. A near-zero account value on an indexed policy is an emergency. On a guaranteed universal life policy it may be entirely normal.
If you see a single declared interest rate with no index named and no guarantee provision, you have plain current-assumption universal life, which is a third animal again.
Our explainers on what a no-lapse guarantee is and what indexed universal life is set out the mechanics of each. Get this identification right before reading further, because acting on the wrong diagnosis is how people surrender a perfectly healthy guaranteed policy or, worse, let a fragile one lapse.
If it is guaranteed universal life: the payment schedule is the product
A secondary guarantee keeps the death benefit in force even when account value falls to zero, but only if a test written into the contract is satisfied. Most carriers implement it through a shadow account: a parallel ledger, invisible in ordinary use, that credits your premiums at contractual rates and debits contractual charges. As long as the shadow account stays positive, the guarantee holds. When it goes negative, the guarantee ends and the policy reverts to ordinary universal life economics — which, at an advanced age with minimal account value, means a very short remaining life.
Three things damage a shadow account, and none of them generates a warning letter that says so plainly.
- Late payments. The shadow account credits premiums as of the date received. A premium paid six weeks late is credited six weeks late, and the interest it would have earned in that period is gone permanently. Repeat that a few times across twenty years and a guarantee to age 121 can quietly become a guarantee to age 84.
- Reduced payments. Paying less than the specified premium in any year has the same effect, magnified.
- Loans and withdrawals. On many guaranteed universal life contracts, taking a loan or a partial withdrawal terminates the secondary guarantee outright. Read the provision before touching the account value for any reason.
Ask the servicer, in writing, for the current guarantee expiry date and the premium required to restore the guarantee to its original duration. Both are calculable and both should be provided. Then compare the restoration premium to what you are paying now. Our page on guaranteed universal life no-lapse guarantee risk covers what to do when the number comes back higher than expected, and our page on how to reinstate a lapsed policy applies if coverage has already terminated.
If it is indexed: caps, participation, and the credited-versus-illustrated gap
An indexed universal life policy does not invest in the market. The carrier credits your account value according to a formula tied to an index, governed by four parameters.
The floor, usually zero percent, means a falling index credits nothing rather than producing a loss. This is real and it is the feature that sells the product. The cap limits the credit in a rising year; it is declared by the carrier, is not guaranteed for the contract’s life, and can be reduced on in-force policies down to a contractual minimum that is often far below the cap in effect at issue. The participation rate determines what fraction of the index movement enters the calculation and is similarly adjustable. And the index measurement is typically price return only, excluding dividends — which removes a meaningful component of total equity return every single year, in rising and falling markets alike.
Those four parameters together explain nearly every case of an owner asking why the statement shows four percent in a year the index gained fourteen. Pull five years of annual statements and write down what was actually credited each year. That history is evidence. The original illustration is not.
Then look at the cost side. Each month the carrier deducts a cost of insurance charge equal to the net amount at risk — roughly death benefit minus account value — times a per-thousand rate driven by the insured’s attained age. That rate is mild in the fifties, steeper through the sixties, and severe from the late seventies onward. When credits lag the illustrated rate, account value lags, which leaves a larger net amount at risk, which produces a larger charge, which shrinks account value further. The loop tightens each year. Our page on what cost of insurance is shows how to find the guaranteed maximum charge table in your own contract.
| Guaranteed universal life | Indexed universal life | |
|---|---|---|
| What keeps it in force | A contractual secondary guarantee tied to a premium schedule | Account value large enough to absorb monthly charges |
| Low account value means | Often normal by design | A warning sign |
| Typical failure mode | A late or reduced premium silently shortens the guarantee | Credits lag illustrated rates while COI charges accelerate |
| Effect of a loan or withdrawal | May void the guarantee outright | Reduces value and accelerates the drag |
| Document to request | Written guarantee expiry date and catch-up premium | In-force illustration on guaranteed assumptions |
| Best default action | Pay the exact premium, on time, by automatic draft | Model the guaranteed-basis lapse year, then decide |
Illustration history: why the issue year matters
Indexed universal life illustrations operated without a uniform national limit until the National Association of Insurance Commissioners adopted Actuarial Guideline XLIX, effective September 2015. AG 49 standardized how the maximum illustrated crediting rate is calculated and capped the illustrated benefit of policy loan arbitrage at one hundred basis points. AG 49-A, applying to policies illustrated from late November 2020, closed the use of multiplier and bonus index accounts to work around the original limits. AG 49-B took effect May 1, 2023, further restricting illustrated rates on buy-up accounts and volatility-controlled index strategies.
So check the issue date. A policy illustrated before September 2015 was sold on a projection produced under the least restrictive standards this product has ever operated under, at a crediting rate current regulation would not permit a carrier to show. The premium recommended at the point of sale was calculated from that projection. As a category, pre-2015 indexed universal life is the most likely to be underfunded relative to what its owner believes they bought.
This history is less relevant to a guaranteed universal life contract, where the promise is contractual rather than projected. That is the underlying reason a GUL, when its premium schedule has been honored exactly, is generally the more reliable of the two products — and the reason a GUL whose schedule has been broken can be in worse trouble than an IUL, because there is no account value to fall back on.
The documents to request, tailored to which product you hold
Request a current in-force illustration from the servicer. It is normally free and you are entitled to it. What you ask for differs by product.
For an indexed policy, request four runs: guaranteed assumptions with maximum cost of insurance and minimum crediting rate; zero percent crediting with current charges; current assumptions at the current planned premium; and a premium solve showing what annual outlay would carry the death benefit to age one hundred on guaranteed assumptions. The first run gives you the earliest year the policy can lapse, and that year should anchor your planning.
For a guaranteed universal life policy, request something else entirely: a written statement of the current no-lapse guarantee expiry date, the specified premium required to maintain the guarantee, the catch-up premium required to restore the guarantee to its original duration, and confirmation of whether any loan or withdrawal has already voided the guarantee. Then request an illustration showing the death benefit continuing to age 121 at the corrected premium.
Put the request in writing and keep the response. Our explainer on what an in-force illustration is shows how to read the lapse-year column, which is where the answer sits and where most people’s eyes skip past on the way to the death benefit figure.
Banner Life, William Penn, and a permanent block that is closed
Banner Life Insurance Company is Maryland-domiciled, operating from Frederick, Maryland, and its primary regulator is the Maryland Insurance Administration. Its New York affiliate, William Penn Life Insurance Company of New York, is separately domiciled and regulated by the New York State Department of Financial Services. If the insured resided in New York at issue, check which entity actually wrote the contract, because that determines where a complaint goes.
Both companies have operated under Legal & General America, the United States arm of Legal & General Group plc of the United Kingdom. In December 2024, Legal & General announced an agreement to sell its US protection business to Meiji Yasuda Life Insurance Company. Verify the current ownership and servicing entity against your latest statement rather than relying on any web page, since these transactions complete on their own schedule and administrative arrangements can shift afterward.
Legal & General America has narrowed its product focus toward term insurance, which means the permanent block is closed or narrowed to new sales. Understand what “closed” does and does not mean. It does not mean your policy is at risk, that guarantees are weaker, or that claims are handled differently — contractual obligations survive intact and the block continues to be administered and regulated. What it can mean practically is fewer product options if you want to exchange or convert into something else, and occasionally slower service on non-routine requests. Our page on what happens when a carrier merged and who owns the policy covers verifying who holds your contract today.
Jurisdictionally: the Maryland Insurance Administration regulates the insurer, not your transaction. Life settlements are governed by the law of the state where the policy owner resides, which sets required disclosures, licensing standards for any provider or broker, and the rescission period after signing.
Deciding what to do
If it is a guaranteed universal life policy with the guarantee intact, the strong default is to keep paying exactly the specified premium, exactly on time, by automatic draft. This is one of the few insurance products where doing nothing clever is the winning strategy. Set the payment up so a human being cannot forget it.
If the guarantee has been shortened or lost, get the catch-up premium quoted and compare it against alternatives. Depending on the numbers, restoring the guarantee, reducing the face amount to a level the current funding supports, or having the policy reviewed for the secondary market may each make sense.
If it is an indexed policy that the guaranteed-basis illustration shows lapsing in the insured’s seventies or eighties, you have a decision to make while options still exist. Fund it to the solve premium if that is affordable and the coverage is needed. Reduce the death benefit to lower the net amount at risk, after confirming in writing that the change will not trigger modified endowment contract status under the seven-pay test in Internal Revenue Code section 7702A. Or have it reviewed.
A secondary market review makes sense when the insured is roughly sixty-five or older, the death benefit is $100,000 or more, and health has declined since issue. In this market, declining health raises value, because pricing follows projected life expectancy rather than account balance. Surrender, by contrast, is usually the weakest option and is irreversible.
Send the policy cover page, the latest annual statement, and any in-force illustrations for a free policy review at (305) 209-7183. No fee, no obligation. Pine Lake Life Solutions provides education and policy reviews; we do not give legal, tax, or investment advice, and anything with tax consequences belongs with your own CPA.
Frequently Asked Questions
How do I know whether I have indexed or guaranteed universal life?
Look on the schedule page. Indexed policies name index accounts and state a cap, a participation rate, and a floor. Guaranteed universal life policies contain a no-lapse guarantee, secondary guarantee, or death benefit guarantee provision with a stated duration. A near-zero account value is normal on a guaranteed policy and a warning sign on an indexed one, so the identification matters.
Can paying a premium late really shorten a lifetime guarantee?
Yes, and it is the most common way these policies fail. Most secondary guarantees run on a shadow account that credits premiums as of the date received. A premium paid weeks late is credited weeks late, and the interest it would have earned is not recoverable. Repeated across two decades, that erosion can move a guarantee expiry date forward by many years.
Should I take a loan against a guaranteed universal life policy?
Read the guarantee provision first. On many guaranteed universal life contracts, any loan or partial withdrawal terminates the secondary guarantee outright, converting a contractually guaranteed death benefit into an ordinary universal life policy with minimal account value. Ask the carrier in writing what a loan would do to the guarantee before requesting one.
Why did my indexed policy credit far less than the index gained?
Three mechanisms account for most of the gap. The cap truncates strong years. The participation rate may apply only a fraction of the index movement. And most indexed accounts measure price return, excluding dividends, which removes a meaningful component of total equity return every year regardless of market direction. All three are disclosed in the contract.
Does a closed product block put my policy at risk?
No. When a carrier stops selling a product line, existing contracts remain fully in force and fully regulated, and claims continue to be paid on the original terms. What can change is the range of options available if you later want to exchange into a different product, and occasionally the speed of non-routine service requests. Your guarantees are unaffected.
Is surrendering better than selling?
Rarely, and never without comparing. Surrender ends the coverage permanently, may trigger a taxable gain, and by definition returns less than what an institutional buyer would consider paying for the same contract. A secondary market review costs nothing and establishes whether a real alternative exists. Get both numbers before choosing an irreversible option.
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Related Reading
- What Is A No Lapse Guarantee
- Gul No Lapse Guarantee Risk
- What Is Indexed Universal Life
- What Is An In Force Illustration
- What Is Cost Of Insurance
- Reinstate Lapsed Policy
- Sell My Banner Life Guaranteed Universal Policy
- Can I Sell An Indexed Universal Life Policy
- Carrier Merged Who Owns Policy
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.