Yes. A guaranteed universal life policy from Security Mutual Life Insurance Company of New York can be sold in a life settlement, and the carrier’s consent is not required, because a buyer purchases the contract directly from you. The 1911 Supreme Court decision in Grigsby v. Russell established life insurance as transferable property, and that has not changed in 2026.
GUL sits in an unusual spot. It is permanent coverage, so it does not expire like term, but it is deliberately priced with almost no cash value, so it does not offer the surrender cushion whole life does. Its entire value rests on a no-lapse guarantee: pay the scheduled premium on time, and the death benefit stays in force to a very late age regardless of interest rates.
That guarantee is what buyers pay for, and it is also what a single late payment can destroy. Below you will find how the guarantee is tested, what the catch-up rules typically require, how offers are shaped, and when keeping the policy is the better answer. Pine Lake Life Solutions is not affiliated with Security Mutual Life Insurance Company of New York.
In This Article
- The Carrier Behind the Contract
- How a No-Lapse Guarantee Is Actually Tested
- Catch-Up Rules When a Payment Slips
- Why Buyers Like GUL
- Hypothetical: Guarantee Intact vs. Guarantee Broken
- Documents and the Ownership Change
- When Keeping the GUL Wins
- Red Flags and the Professionals to Involve
- Frequently Asked Questions
The Carrier Behind the Contract
Security Mutual Life Insurance Company of New York is headquartered in Binghamton, New York, with roots going back to the 1880s. It has long operated as a mutual insurer owned by its policyholders rather than by stockholders, so GUL owners generally do not face the who-actually-holds-my-policy confusion that follows a demutualization or a block sale. Verify the company’s present corporate status and whether it continues to issue new individual coverage in 2026.
Two more items should be verified rather than assumed: the company’s current A.M. Best financial strength rating, and the policyholder service number published on its own website. The number on your latest premium notice is the practical place to start, since that office is the one that will confirm your guarantee status and process an ownership change.
How a No-Lapse Guarantee Is Actually Tested
Most no-lapse guarantees run on a cumulative premium test rather than a simple on-time check. At each monthly processing date, the carrier compares total premiums paid, adjusted for when they arrived, against a required cumulative amount built into the contract. Pass and the guarantee holds. Fail and the guarantee can terminate even though the policy itself keeps limping along on whatever account value remains.
Timing counts as much as amount. Paying the right annual premium three months late can fail the test, because the calculation credits money from the date received. This is the single most misunderstood feature of GUL and the reason owners should ask, in writing, for a guarantee status letter stating whether the no-lapse guarantee is currently in force and to what age.
Catch-Up Rules When a Payment Slips
Contracts vary, so read yours, but the common pattern is that a shortfall can be cured by paying the missed amount plus an interest adjustment, often within the grace period or a defined number of days afterward. Some contracts allow a longer catch-up. Others allow the guarantee to be restored only with carrier approval and evidence of insurability, which is a problem for anyone whose health has declined.
Ask the service center for three numbers: the exact catch-up amount, the deadline to pay it, and what the guarantee age reverts to if you do not. If you are considering a sale, know that a buyer will ask the same questions. A policy whose guarantee is intact prices differently from one whose guarantee has quietly lapsed, so it is often worth curing a shortfall before shopping the policy.
Why Buyers Like GUL
Buyers value predictability. A GUL with an intact guarantee tells a buyer, in contract language, exactly what it costs to keep a fixed death benefit in force to age 95, 100, or 121. There is no interest rate risk, no market risk, and little charge risk. Compared with a variable or traditional universal life policy, there is far less to model.
The usual thresholds still apply: insureds generally 65 and older, death benefits of $100,000 or more, and a health picture that has changed since issue. Settlement proceeds across the market broadly range from about 10% to 35% of face value. Where GUL stands out is the comparison against surrender. Because these contracts hold little cash value, the GAO’s finding in GAO-10-775 that settlements ran roughly four to eight times cash surrender value understates the gap for GUL specifically, where surrender value is often near zero.
| Question to ask the carrier | Why it matters | Get it in writing? |
|---|---|---|
| Is the no-lapse guarantee currently in force? | Determines whether the policy prices as GUL or as ordinary UL | Yes |
| To what age does the guarantee run? | Sets the length of coverage a buyer is acquiring | Yes |
| What premium maintains the guarantee? | The carrying cost a buyer must fund every year | Yes |
| If I am behind, what is the catch-up amount and deadline? | Curing a shortfall can restore substantial value | Yes |
| What is the current cash surrender value? | Your baseline alternative; usually very small on GUL | Yes |
| What is my loan payoff, including interest? | Loans reduce the net death benefit and your proceeds | Yes |
| Which forms are needed for a change of ownership? | Prevents delay at closing | Yes |
Hypothetical: Guarantee Intact vs. Guarantee Broken
Illustration only, not a quote. Two 77-year-olds each own a $600,000 Security Mutual GUL with a $14,000 guarantee premium. Owner A has paid on schedule for fifteen years; the guarantee runs to age 100. Owner B skipped two payments during a hospitalization and never cured them; the guarantee terminated and the policy now runs on a $6,000 account value that current charges will consume within a few years.
Owner A can offer a buyer a fixed cost and a locked benefit. Owner B is offering a policy that will require rising, uncertain premiums, priced like ordinary universal life. Same face amount, same age, very different outcomes. If Owner B can still cure the shortfall, doing so before shopping the policy is usually the single highest-value step available.
Documents and the Ownership Change
Gather the policy cover page, the most recent annual statement, a written guarantee status letter, and an in-force illustration showing the premium required to maintain the guarantee to the guarantee age. Add a loan payoff quote if any loan exists, since a loan reduces the net death benefit and the offer. You will sign a HIPAA authorization so a life expectancy assessment can be completed.
Closing happens through a change of ownership, or absolute assignment, on the carrier’s own forms naming a new owner and beneficiary. Escrow holds funds until the carrier confirms recording. Ask the service center in advance about required form numbers and notarization. Expect the full timeline to run about 60 to 120 days, and expect additional disclosures if you are a New York resident, since the state regulates settlements under its own statute.
When Keeping the GUL Wins
GUL is usually bought for a purpose: guaranteeing an inheritance, funding an estate tax bill, equalizing assets between children, or backing a business agreement. If that purpose still exists and the premium fits the budget, keeping the policy is generally the better decision, because you are trading a guaranteed future payout for a smaller sum today.
Keep it, too, if a surviving spouse would face a genuine income shortfall without it. And if the insured is terminally ill, look first at any accelerated death benefit rider, which pays part of the face amount straight from the carrier and typically far faster than a sale. Selling belongs in the picture when the premium has become unaffordable, the original purpose has passed, or money is needed now for care.
Red Flags and the Professionals to Involve
Be wary of anyone who asks for an upfront fee to market your policy, who discourages you from seeing competing offers, or who describes the tax treatment as simple. Broadly, settlement proceeds are taxed in layers tied to your cost basis, and the 2017 federal tax law changed part of that computation. That is a description of how the rules are built, not tax advice, and a CPA should run your numbers.
If long-term care or Medicaid planning is behind the decision, involve an elder law attorney before converting coverage into cash, because a lump sum is a countable asset and gifting it can trigger look-back consequences. For a no-cost read on whether a Security Mutual GUL is a candidate, send the policy cover page for a free policy review or call (305) 209-7183.
Frequently Asked Questions
How do I know if my no-lapse guarantee is still intact?
Request a written guarantee status letter from the carrier’s policyholder service center. It should state whether the guarantee is in force and to what age. Do not rely on a phone conversation, because this single fact drives most of the policy’s value.
I paid a premium late. Did I lose the guarantee permanently?
Not necessarily. Many contracts allow a catch-up payment of the shortfall plus an interest adjustment within a limited window. Others require carrier approval. Ask for the exact amount and deadline right away, because the window can close quickly.
Why is my GUL’s cash surrender value so low?
Guaranteed universal life is deliberately priced to deliver death benefit rather than accumulation. Very little of the premium goes toward building cash value, which is why surrendering a GUL often returns far less than owners expect.
Does Security Mutual need to approve the sale?
No. The carrier records a change of ownership and beneficiary after the transaction closes. Your right to sell the contract belongs to you as the owner.
How much might a GUL policy sell for?
Life settlements across the market broadly run about 10% to 35% of the death benefit, with most cases well below the high end. Age, health, face amount, and the guarantee premium all affect the number, and only a full review produces an actual offer.
What happens to my beneficiaries?
After the sale, the buyer becomes both owner and beneficiary, so your family no longer receives a death benefit from this policy. That trade-off is the core of the decision and should be discussed with family before you sign.
How long does the process take?
Generally 60 to 120 days from first review through medical underwriting, offers, and carrier processing of the ownership transfer.
Is Pine Lake affiliated with Security Mutual?
No. Pine Lake Life Solutions is an independent company with no relationship to Security Mutual Life Insurance Company of New York.
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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.