Variable Universal Life Insurance
Variable Universal Life combines features of a variable life and universal life policy to create an extemely flexible product. Just as with Universal Life, after the initial premium, you are able to decide when and how much more to pay into your policy. The restrictions are the same as with the universal life policy. You can also adjust the death benefit of the policy.
It has similar features to variable life where the policy holder has a wide variety of investment options to choose from with a variable universal life policy. Variable universal life insurance is similar to universal life but the cash value portion is invested in mutual funds and performs however well the particular funds that are chosen. The policy holder has the ability to be an aggressive or conservative investor within their own policy.
The cash value is still dependent on the interest gained. Since this product is variable, there are no guarantees, which are provided with whole Life and universal life. Sub-accounts are the investments selected within the variable universal life policy that determine the interest applied to the cash value. It is important to have a representative you trust to assist you in making your sub-account selections, so your selections match your risk tolerance.
Overall, VUL policies give you the flexibility to pay more into the policy to help accrue cash values quicker, within certain limits and also the ability to pay less if you need to. In addition, the investment portion is largely dependant on the investments chosen by the policy holder. Variable Universal Life has increasingly become more popular than variable life, due to its flexibility.
- Builds cash value.
- Flexibility of Universal Life - Adjusting the death benefit
- Flexibility of Universal Life - How much more to pay for premiums in order to increase cash value.
- Felxibility of Variable Life - Choose your investments according to the risk that you are comfortable with.
- Cash value has no gaurantees.
- Increased risk when choosing stocks as investments.
- You may forfeit the entire cash value of the policy if your chosen investment "mix" performs poorly.
If you need a flexible permanent life insurance policy, variable universal life insurance may be a good life insurance option for you.