Yes – a guaranteed universal life policy can be sold in a life settlement when the policyholder and the policy qualify, and with GUL a settlement is frequently the only exit that returns meaningful money. The buyer purchases your contract. The insurance company’s permission is not required, and the carrier is not a party to your decision.
Start by confirming the product. Homesteaders Life Company of West Des Moines, Iowa is a mutual carrier whose business is overwhelmingly pre-need funeral insurance sold through funeral homes – small-face permanent coverage tied to a funeral arrangement, not no-lapse GUL written for estate or income protection. As of 2026, call and confirm the issuing company and product name. A pre-need policy and a GUL behave nothing alike, and only one of them is a settlement candidate.
If you do hold a GUL, the rest of this page is about protecting the feature that makes it valuable: the secondary guarantee. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Homesteaders Life Company or any funeral home. Education only – not legal, tax or investment advice.
In This Article
GUL Versus Pre-Need: Telling Them Apart
A guaranteed universal life policy is built to deliver a death benefit for life at the lowest possible cost. It carries almost no cash value on purpose, and its defining feature is a no-lapse guarantee running to a target age such as 90, 95, 100 or 121. Face amounts are typically large.
A pre-need funeral policy is sized to a funeral – often under $25,000 – is frequently assigned to a funeral home, and may be designed so the benefit grows with the cost of the goods and services selected. There is no secondary guarantee schedule, because that is not what the product does.
Look for the phrase “no-lapse guarantee” or “secondary guarantee” on the statement. If it is not there, you are probably not holding a GUL.
Why Surrender Is Nearly Worthless on a GUL
Ask for the cash surrender value of a fifteen-year-old GUL with a large death benefit and the number may come back in the hundreds or low thousands of dollars. That is not a flaw. Every premium dollar was directed at buying guaranteed death benefit rather than building savings, which is why GUL premiums are lower than comparable whole life.
So the meaningful comparison for a GUL owner is not settlement versus surrender. It is settlement versus letting the policy lapse – and lapse returns nothing at all, erasing every premium ever paid. Our page on cash surrender value explains why the figure is so small, and settlement versus surrender lines the choices up side by side.
The Guarantee Is Fragile – Treat It That Way
A secondary guarantee is a contractual test, usually cumulative: by each due date, you must have paid at least a specified total premium. Meet the test and the death benefit stays in force even if the account value hits zero. Fail it and the contract typically falls back to ordinary universal life mechanics, where a nearly empty account value has to absorb an age-banded cost of insurance on its own.
What breaks a guarantee:
- A payment made after the due date or grace period.
- A payment that is short of the cumulative requirement, even by a small amount.
- A policy loan or a partial withdrawal.
- A face amount or rider change made without checking the guarantee impact.
Many contracts include a catch-up provision – pay the shortfall plus interest inside a stated window and the guarantee is restored, sometimes at a reduced target age. Others do not. Ask the servicing company in writing whether your guarantee is currently intact, what the cumulative requirement is, and whether catch-up is available.
| Compare | Guaranteed Universal Life | Pre-Need Funeral Policy |
|---|---|---|
| Purpose | Guaranteed death benefit for life | Funding a specific funeral arrangement |
| Typical face amount | Often $100,000 or more | Commonly under $25,000 |
| Cash value | Minimal by design | Small, grows slowly |
| Defining feature | No-lapse secondary guarantee | Benefit often tied to funeral goods and services |
| Ownership | Held by the insured, a trust or a business | Frequently assigned to a funeral home |
| Settlement outlook | Often a strong candidate | Generally not sellable |
Reinstatement After a Lapse Is Not a Plan
If a GUL actually lapses, reinstatement usually requires back premiums with interest plus evidence of insurability – meaning the company underwrites the insured again. For a senior whose health has declined, that is often the end of the road, and the irony is painful: the health change that would have made the policy valuable in a settlement is the same change that blocks reinstatement.
The lesson is operational. If a lapse notice or grace-period letter arrives, do not wait to see what happens. Address the payment first and explore your options second.
How Buyers Price a GUL
Buyers price the guarantee, not the cash value. Specifically: the death benefit, the premium schedule required to keep the no-lapse guarantee alive, the target age of that guarantee, and the insured’s life expectancy from medical records.
Favorable factors are a long guarantee period, an intact payment history, a modest required premium relative to the death benefit, no loans or withdrawals, and a death benefit of $100,000 or more, which is the level Pine Lake reviews. The GAO’s market study (GAO-10-775) found sellers typically received about 10% to 35% of face value. On GUL the multiple over surrender value can look enormous simply because surrender value is near zero, which is why face value and the lapse alternative are the better yardsticks. See how much a policy can bring.
The One Illustration to Request
Do not settle for a generic current-assumptions run. Ask the servicing company for an in-force illustration that solves for the premium required to maintain the no-lapse guarantee to its maximum guaranteed age, along with a written statement of whether the guarantee is currently in force and whether any shortfall exists.
That single document is what a buyer works from. Requests are usually free and take one to three weeks. See what an in-force illustration is for how to read the columns.
Process, Timing, and the Rule That Matters Most
A transaction runs about 60 to 120 days: a few days for the free review from the policy cover page, two to four weeks for the illustration and medical records, a couple of weeks for underwriting and offers, then contracts, escrow and the ownership change with the insurer.
Keep paying premiums until the sale funds. This is the single most important rule for GUL sellers. One missed or short payment during a pending transaction can damage the guarantee that gives the policy its value and can reduce or cancel an offer already on the table. Funds should be held by an independent escrow agent, and most states provide a rescission window after funding.
Selling makes sense when the reason for the coverage has ended or the premium has become unsustainable. It does not when heirs still rely on the benefit and the premium is affordable. Work through is a life settlement worth it, talk to your own CPA or attorney about taxes and estate effects, then send the policy cover page for a free review or call (305) 209-7183.
Frequently Asked Questions
Can a GUL policy be sold when it has no cash value?
Yes. Buyers price guaranteed universal life on the death benefit, the required premium and the length of the no-lapse guarantee. Minimal cash value is how the product is designed and it does not prevent a sale.
Does Homesteaders Life issue guaranteed universal life?
Homesteaders Life Company is known for pre-need funeral insurance sold through funeral homes, which is small-face permanent coverage rather than no-lapse GUL. Confirm the issuing company and product name with the carrier as of 2026 before proceeding.
What happens if I pay a GUL premium late?
You may fail the secondary guarantee test, which can drop the contract back to ordinary universal life mechanics and cause it to lapse far earlier than promised. Some contracts allow a catch-up payment with interest inside a stated window. Ask the carrier in writing whether the guarantee is intact and whether catch-up applies.
Can I reinstate a lapsed GUL?
Sometimes, but it usually requires back premiums with interest plus evidence of insurability, meaning the insured is underwritten again. If health has declined, reinstatement often is not available, which is why a lapse notice should be handled immediately.
Should I stop paying once I decide to sell?
No. Keep paying until the transaction funds and the ownership change is recorded. A missed payment during the process can damage the guarantee and reduce or cancel an offer.
Which illustration do buyers need?
An in-force illustration that solves for the premium required to maintain the no-lapse guarantee to its maximum guaranteed age, plus written confirmation that the guarantee is currently in force. A standard current-assumptions run is not the same thing.
How much can I expect to receive?
No figure can be quoted without reviewing the actual policy. The federal GAO study of the market found sellers typically received roughly 10% to 35% of face value, with the result driven by age, health, death benefit size and the premium required.
Is Pine Lake affiliated with Homesteaders Life?
No. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Homesteaders Life Company or any funeral home. This page is educational and is not legal, tax or investment advice.
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Related Reading
- Cash Surrender Value Life Insurance
- Life Settlement Vs Surrender
- What Is An In Force Illustration
- How Much Can I Get For My Life Insurance Policy
- Sell My Homesteaders Universal Life Policy
- Sell My Homesteaders Whole Life 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.