A universal life policy is sellable when the insured is old enough or impaired enough that a buyer expects to collect the death benefit before the accumulated premiums outrun it — and unsellable when they are not. Everything else in the analysis is detail. But the detail matters, because a universal life contract can be failing for years without anyone noticing, and the owner who finds out in a grace-period notice has already lost most of their options.
Universal life was sold as flexible. You could pay more in good years, less in tight ones, and the account value would absorb the difference. That flexibility is real, and it is also the mechanism by which these policies quietly fall apart. Every month the insurer deducts a cost of insurance charge and expense loads from the account value. When the credited interest and the premiums stop covering those deductions, the account value starts falling. The policy is still in force and the statements still arrive, so nothing looks wrong until the account value approaches zero.
Before you can request anything from the carrier, you need to know which Great Western entity you are dealing with — several companies have used variations of the name, in different states, under different regulators.
In This Article
- Flexible Premium: How It Works and Why It Fails
- Cost of Insurance: The Charge That Compounds Against You
- No-Lapse Guarantees Break Quietly and Permanently
- Five Numbers That Tell You Where the Policy Stands
- Identifying the Carrier and the Protection Behind It
- What Makes a Universal Life Policy Actually Sellable
- If the Policy Is Already in a Grace Period
- Frequently Asked Questions
Flexible Premium: How It Works and Why It Fails
A universal life policy is an account, not a schedule. Premiums go in, monthly deductions come out, and interest is credited on what remains. Three things flow out every month:
- The cost of insurance charge, calculated on the net amount at risk — the death benefit minus the account value — times a per-thousand rate based on the insured’s attained age and risk class.
- Policy and administrative expense charges, sometimes a flat monthly amount plus a per-thousand-of-face charge.
- Rider charges, for waiver of premium, accidental death, or a no-lapse guarantee if it carries its own cost.
Premium payments are credited after a percentage load. What is left earns interest at the carrier’s declared rate, subject to a guaranteed minimum written into the contract — commonly 2%, 3%, or 4% on older policies.
The failure mode is arithmetic. Policies sold in the late 1980s and 1990s were frequently illustrated at credited rates of 8% to 12%, because those rates were plausible when interest rates were high. Rates fell for three decades and many blocks were credited at or near their guaranteed minimums for years. The account values never reached the illustrated levels, and premiums calculated to be sufficient at 10% were nowhere near sufficient at 4%. The shortfall compounds, because the smaller the account value, the larger the net amount at risk and therefore the larger the cost of insurance charge. Our primer on how universal life actually works covers the same mechanics without carrier specifics.
Cost of Insurance: The Charge That Compounds Against You
The cost of insurance rate rises every year with the insured’s attained age, and the increase is not linear. Mortality rates roughly double every seven to eight years in later life, so the per-thousand charge at 85 can be many multiples of the same policy’s charge at 65. Applied to a net amount at risk that is growing at the same time, the monthly deduction can go from manageable to punishing inside a decade.
Two additional points are worth knowing. First, most contracts state both a current COI scale and a guaranteed maximum scale. The carrier may move from the first toward the second within the contract’s terms. During the 2010s, several insurers raised current COI rates on older universal life blocks, triggering extensive litigation and regulatory attention; New York’s Department of Financial Services and other regulators issued guidance in 2016 requiring insurers to substantiate and give notice of adverse cost-of-insurance changes. If your policy’s monthly deduction jumped without an age-based explanation, request the current and guaranteed COI scales in writing.
Second, reducing the face amount reduces the net amount at risk, which reduces the COI charge proportionally. This is the most effective and least used repair available to a struggling universal life policy. Lowering a $500,000 death benefit to $250,000 can cut the monthly deduction roughly in half and extend the policy’s life by many years without another dollar of premium. Ask the carrier to illustrate it before assuming the only choices are pay more, surrender, or sell. The details of the charge are laid out in our explainer on cost of insurance.
No-Lapse Guarantees Break Quietly and Permanently
Many universal life contracts written after the late 1990s carry a secondary guarantee — a no-lapse guarantee that keeps the death benefit in force even if the account value falls to zero, provided a specified premium test is satisfied. This is the feature people rely on most and understand least.
The test is usually run through a shadow account: a separate ledger, invisible on your statement, that accumulates your premiums at a specified rate and subtracts specified charges. If the shadow account stays positive, the guarantee holds. If it goes negative, the guarantee is lost.
Three characteristics make this dangerous:
- Timing counts, not just amount. Paying the same annual premium two months late reduces the shadow account’s credited interest. Repeated over years, the guarantee period shortens.
- A broken guarantee often cannot be restored. Some contracts permit a catch-up payment with interest inside a limited window; others do not. Once gone, the policy reverts to ordinary universal life mechanics with an account value that was never funded to survive on its own.
- Nothing on the annual statement announces it. The statement shows the account value, not the shadow account. Owners have discovered the guarantee lapsed years earlier only when the policy entered a grace period.
Ask the carrier directly, in writing: is the no-lapse guarantee currently in force, to what age is it guaranteed at the current payment pattern, and what premium is required today to restore or extend it. See how no-lapse guarantees are structured for the underlying design.
| Symptom on the statement | What it usually means | First request to the carrier |
|---|---|---|
| Account value falling despite paying the same premium | Monthly deductions exceed premium plus credited interest | Premium required to carry the policy to maturity |
| Monthly deduction rose sharply without a birthday explanation | Possible current COI scale increase | Current and guaranteed maximum COI scales in writing |
| Credited rate at the contract minimum | Policy is earning its guaranteed floor only | In-force illustration at guaranteed assumptions |
| Loan balance approaching account value | Lapse risk with a possible taxable event | Exact loan payoff with accrued interest |
| Grace period notice received | Account value cannot cover the next deduction | Exact amount and deadline; reduced paid-up figures |
Five Numbers That Tell You Where the Policy Stands
Pull the most recent annual statement and an in-force illustration, and find these figures. Together they answer nearly every question an owner has.
1. Net cash surrender value. Account value minus any surrender charge and any outstanding loan. This is your floor — the amount you can take today by ending the contract.
2. Current monthly deduction. COI plus expense and rider charges. Multiply by twelve and compare to your annual premium. If the deduction exceeds the premium, the account value is being consumed.
3. Years to lapse at the current premium. The in-force illustration reports this at both current and guaranteed assumptions. The guaranteed column is the honest one, because it shows what the carrier is contractually allowed to do.
4. Premium required to carry the policy to age 100 or maturity. If that number is unaffordable, you have your answer about whether keeping the policy is realistic.
5. Outstanding loan balance with accrued interest. Loans on older contracts compound quietly. A loan approaching the account value creates a real risk of a lapse that triggers taxable phantom income — surrendering with almost no cash in hand and receiving a 1099 anyway. That specific outcome is worth raising with your own tax advisor before doing anything.
Carriers must provide in-force illustrations on request; expect a two to four week turnaround and sometimes a nominal fee. What each column means is covered in our guide to reading one.
Identifying the Carrier and the Protection Behind It
Several insurers have used the Great Western name, and the distinctions are not cosmetic.
Great Western Insurance Company is domiciled in Utah, based in Ogden, and regulated by the Utah Insurance Department. Its business has historically been pre-need funeral funding and final expense coverage rather than retail universal life. Global Atlantic Financial Group acquired the company in 2020, and Global Atlantic became a wholly owned KKR subsidiary in January 2024.
Great-West Life & Annuity Insurance Company, with a hyphen, was Colorado-domiciled under the Colorado Division of Insurance and transferred substantially all individual life and annuity business to Protective Life Insurance Company effective June 1, 2019. Servicing on those contracts generally runs through Protective today. There is a separate live page covering the Great-West universal life block.
The Great-West Life Assurance Company, Winnipeg, amalgamated into The Canada Life Assurance Company on January 1, 2020.
We can confirm these in-force blocks. We cannot confirm a currently marketed retail universal life product branded “Great Western Life” as of 2026, so treat the contract as part of an in-force block and let the specifications page identify it. Look up the NAIC company code at the NAIC Consumer Information Source for the current legal entity and domicile.
One related point owners ask about: every state has a life and health insurance guaranty association that protects policyholders if an insurer becomes insolvent, coordinated nationally through NOLHGA. Coverage limits are set by state law and commonly run to $300,000 in death benefits and $100,000 in net cash surrender value per insured life, though several states are higher. This is backstop protection, not a reason to ignore a failing policy.
What Makes a Universal Life Policy Actually Sellable
Buyers in the secondary market look for a specific profile, and it is worth measuring your situation against it honestly before spending months on the process.
- Insured age 65 or older, or younger with a serious health impairment. Age alone is not enough; a healthy 70-year-old with a long life expectancy is a difficult case.
- Face amount generally $100,000 or more. Fixed transaction costs — two life expectancy reports, legal review, escrow, ongoing premium administration — do not scale down.
- A manageable cost to keep the policy in force. This is where universal life often shines relative to term: a policy with a meaningful account value may need little outside premium for years, which improves the buyer’s economics directly.
- Clean ownership. No unresolved collateral assignment, no irrevocable beneficiary who will not consent, clear authority if a trust or business owns the contract.
- Past the two-year contestability period.
Where a policy has substantial net cash surrender value and the insured is in good health, surrender frequently beats any settlement offer, and an honest analysis will say so. The reason to get a valuation first is that you cannot know which case you are in without comparing the two numbers. Our breakdown of lapse versus surrender versus settlement sets the three outcomes side by side.
If the Policy Is Already in a Grace Period
A grace period notice means the account value can no longer cover the monthly deduction. Typical grace periods run 31 days, though some contracts allow 61. Coverage continues during the grace period, and if the insured dies within it the death benefit is generally payable less the overdue charges. This is a deadline, and it is short.
Do these things in this order:
- Find out the exact amount and date required to keep the contract in force, in writing. The number quoted is often much smaller than owners fear — sometimes only the shortfall in monthly deductions rather than a full premium.
- Ask what a face amount reduction would do. Lowering the death benefit lowers the deduction and may make the policy self-sustaining.
- Ask for the nonforfeiture options. Reduced paid-up coverage or extended term insurance may preserve some benefit without further payment.
- Get a valuation before the policy terminates. A policy in force has options; a lapsed policy generally has none. Reinstatement is sometimes available — commonly within three to five years, with evidence of insurability and repayment of overdue charges with interest — but an impaired insured usually cannot satisfy the health requirement.
Our page on what to do when a policy is lapsing covers the emergency sequence. A free policy review at Pine Lake Life Solutions can be done from the cover page and the most recent statement, costs nothing, and includes telling you when the honest answer is that keeping or surrendering beats anything the market would pay.
Frequently Asked Questions
My statement says the policy is in force. Does that mean it is healthy?
No. In force only means the contract has not terminated. A policy can be in force and still projected to lapse within a few years once the account value is exhausted. The document that answers the health question is an in-force illustration showing years to lapse at both current and guaranteed assumptions. Ask for both versions in the same request.
Can the insurance company really raise my cost of insurance rates?
Within the contract, generally yes, up to the guaranteed maximum scale, and subject to the requirement that increases apply to a class rather than an individual. Several carriers did raise current rates on older universal life blocks in the 2010s, prompting litigation and regulatory scrutiny. Request the current and guaranteed scales in writing and compare them; the gap shows your remaining exposure.
Will reducing the death benefit hurt a future sale?
It reduces the amount a buyer would pay, since the face amount is what they collect. But a reduction that keeps a failing policy alive is usually better than a lapse that leaves nothing to sell. If a sale is genuinely under consideration, get a valuation before reducing the face, because the two decisions interact and the sequence matters.
What happens to my no-lapse guarantee if I skip a year?
It may shorten or end, depending on the contract’s shadow account mechanics. Some policies allow a catch-up payment with interest inside a limited window to restore the guarantee; others treat the loss as permanent. Ask the carrier specifically whether the guarantee is currently in force, to what age, and what payment would restore it. Get the answer in writing.
Is a universal life policy worth more to a buyer than a term policy?
Often, yes, for a structural reason. A universal life contract with a meaningful account value may need little or no outside premium for several years, which lowers the buyer’s carrying cost and raises what they can pay. Term must first be converted into permanent coverage at conversion pricing, which frequently consumes the margin entirely.
How long does the sale process take once I decide?
Typically 60 to 120 days. Gathering five years of medical records is the slowest step and depends on how fast physician offices respond. Life expectancy underwriting adds two to four weeks, bidding another week or two, and closing plus the state-mandated rescission period adds several weeks after an offer is accepted. Keep paying premiums throughout.
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Related Reading
- What Is Universal Life Insurance
- What Is Cost Of Insurance
- What Is A No Lapse Guarantee
- What Is An In Force Illustration
- Lapse Vs Surrender Vs Settlement
- Policy Lapsing What To Do
- What Is Policy Reinstatement
- Sell My Great West Life Universal Life Policy
- How Much Is My Policy Worth
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.