Clients buy guaranteed universal life for dependable lifetime protection. But needs change over the years. A return of premium feature available on some GUL policies gives clients a built-in exit strategy, and it opens up several practical planning uses.
Key takeaways
- Some GUL policies include a return of premium feature that lets clients surrender at set anniversaries and get their premiums back.
- Clients who don’t use the feature keep their coverage with no impact on the policy.
- Common uses include retirement income, college costs, business planning and paying up a second policy.
If clients don’t use the return of premium window, the policy simply continues — the option costs them nothing to keep.
How the return of premium feature works
With one design we’ve seen, the client buys a guaranteed universal life policy and pays the premium required to guarantee the death benefit to age 100. At the 15th, 20th and 25th policy anniversaries, the client has a 60-day window to surrender the policy and receive their paid premiums back. If they don’t use the window, the policy continues unchanged. Features, timing and cost vary by carrier, so confirm current availability and terms.
Four ways clients can use it
- Retirement. A 45-year-old has 20 years of death benefit protection. At 65, she takes her premiums back to supplement retirement income.
- College costs. A parent with young children owns two permanent policies, one a GUL with return of premium. Once the children reach college age and the family’s coverage needs change, he surrenders the GUL in year 15, 20 or 25 and uses the cash for tuition.
- Business planning. A business owner buys GUL to protect her company against the loss of a key employee. The employee resigns in year 18; at the 20-year window, she receives her premiums back.
- Paying up another policy. A 55-year-old needs $5 million of coverage and buys two GULs, $2 million and $3 million. At 75 he needs less. He surrenders the $2 million policy and uses the cash to pay up the $3 million policy, leaving him with no further premiums.
Why it helps the sale
The biggest objection to permanent coverage is the fear of paying premiums for decades and getting nothing back if plans change. A return of premium option answers that objection directly. It also creates natural review points at each anniversary window. For key person uses, see how much key person coverage a business can buy.
Frequently asked questions
What is return of premium on guaranteed universal life?
It is a feature on some GUL policies that lets the owner surrender the policy at specific anniversaries, such as years 15, 20 and 25, and receive the premiums paid back.
Does the return of premium feature cost extra?
It depends on the carrier and product. Some have included it at no additional charge; others price it in. Confirm current terms before illustrating.
What happens if the client doesn’t use the window?
The policy continues as a guaranteed death benefit policy with no change.
Reviewed by Tim Fuller on 2026-09-26
Tim Fuller
President, SRS Inc.
Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.
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