Variable Universal Life Insurance
Variable universal life insurance provides a combination of the investment options of variable life insurance, plus the flexibility of universal life insurance. The big advantage is that you have significantly more control over the cash value of the policy than with other types of insurance. This is an attractive option for those wanting to make investment choices themselves. Keep in mind, however, that the amount of the death benefit for your beneficiary depends on how well the investments perform.
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Benefits of Variable Universal Life Insurance
As previously mentioned, with a variable universal life insurance policy, you make decisions about how your premiums are invested. You select the investment options from the insurance company’s offerings – usually stock, bond and money market funds – so you have control over where the money is invested.
Despite the performance of your investments, there is a guaranteed minimum death benefit paid out. This minimizes the risk of you investment performance by ensuring that your beneficiary gets an adequate payout after your death.
The universal life insurance portion of the policy allows you to make changes to the premium amounts and to the death benefit. The cash values of a variable universal life insurance policy grow on a tax-deferred basis, and the investment option provides potential for an even higher return cash value.
As with whole life policies, the variable universal life insurance policy grows tax free, with the option to borrow against the cash value.
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Variable Universal Life Insurance Policy Drawbacks
This type of policy is more risky than traditional universal life insurance. As with any investment choices, there is a risk that their performance will not yield favorable returns. The cash value will likely vary over the life of the policy, depending on how your investments perform. Variable universal life insurance is not recommended for inexperienced investors due to the complexities involved.
Another drawback is that variable universal is an expensive option because of the additional fees and charges for this type of policy.
Looking For More Affordable Life Insurance Premiums?
While a variable universal life insurance policy offers flexibility and the potential to build large cash value, the premiums can be very expensive. For more affordable coverage, consider term life insurance – get a free quote today!
Life-Insurance-Info.us is not a life insurance broker or carrier, and cannot issue life insurance policies. This site provides free information on insurance providers and coverage options. We are not associated with the companies profiled on Life-Insurance-Info.us and we make no representation, express or implied, that you will receive a quote from a specific company profiled herein. Products and policies may not be available in all states, and product and policy information is subject to change without notice. Please contact the insurance company directly to answer your policy inquiries.
Last Updated: June 16, 2009
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