What is variable universal life insurance?

Variable life insurance is a type of permanent life insurance that has the ability to accumulate cash value while providing variety and control over professionally managed investment options. Similar to whole life insurance, variable life insurance will provide a tax-free death benefit to your beneficiaries if you pass away, but it differs in that the money you put in is invested in subaccounts – similar to how mutual funds are structured. 

You have the freedom to monitor and make decisions on where to allocate your funds over time. This product also provides flexible premiums and a flexible death benefit. As a permanent life insurance policy, variable life insurance is also available for your entire life, as long as you continue to make the monthly or annual payments in full on time.

How does variable universal life insurance work?

With a variable life insurance policy, a certain amount of what you pay each month or annually will go into a tax-deferred savings account, with the opportunity to invest the cash value in subaccounts offered by the insurance company. You have the potential to earn more than you would with a whole life insurance policy; however, you run the risk of investing in an under performing market. If you pass away, the policy pays a death benefit to your beneficiary — typically a family member — if your death benefit is still intact.
You can use this life insurance calculator from Nationwide to determine if variable life insurance is the right policy for you and your family.

Who can benefit from variable universal life insurance?

Variable universal life insurance is good for someone who:

  • Is looking for a permanent life insurance policy that has the ability to accumulate cash value
  • Wants variety and control over their investment options
  • Wants the freedom to monitor and make decisions on where to allocate their funds over time
  • Understands that investing involves rewards, but also risks that may have the potential to reduce the policy's cash value

How does variable universal life insurance work?


Determine how much you need

Calculate how much your beneficiary may need to cover expenses. Use our life insurance tool.


Decide how your money should be invested

Work with your financial professional to determine the best investing strategy for your cash value.


Death benefit allocation

The policy pays a death benefit to your beneficiary — typically a family member — if your death benefit is still intact.

Pros and cons of variable life insurance

Pros of variable life insurance

  • Permanent life protection
  • High-quality investment options with more growth potential
  • Potential to earn higher than average on cash value accumulation
  • Flexible death benefit
  • Tax-deferred earnings you can withdraw from

Cons of variable life insurance

  1. Greater responsibility on you with investment risk – you select and monitor your own investment options, instead of the insurance company doing it for you
  2. Strategies and products you choose may not suit your long-term life insurance needs
  3. Must be able to continue to make premium payments so your policy does not lapse if the market goes down
  4. If you take out a loan, withdrawal, or partial or whole surrender, your death benefit may be reduced or your policy may face tax consequences

Additionally, there are fees and charges for variable life insurance, including a cost of insurance based on characteristics of the insured person such as gender, health and age. There may also be underlying fund charges and expenses, and additional charges for riders that customize a policy to fit your individual needs.

Tools & resources

Make the most out of your variable universal life insurance policy.
Topics to discuss with your advisor

Topics to discuss with your advisor

  • What is guaranteed with this type of policy?
  • What are my investment options?
  • How much does my beneficiary get?

Don't have an advisor? Call our insurance specialists to get the help you need. 1-866-207-9160

[1] As long as premiums are paid.

Please read this important information

Keep in mind that investing involves market risk, including the possible loss of principal. Also, know that underlying investment options are only available in variable annuity and variable life insurance contracts. They are not offered directly to the public.

Protections and guarantees are subject to the claims-paying ability of the issuing life insurance company.

Keep in mind that taking money from your policy immediately reduces both the cash value and the death benefit payable, and can cause the need for more premiums to be paid into the policy in the future. You should always take care to ensure that your life insurance needs continue to be met over time subsequent to taking cash from your policy.

Variable products are sold by prospectus. You can obtain the product prospectus and underlying fund prospectuses by writing to Nationwide Life Insurance Company, P.O. Box 182021, Columbus, OH 43218-2021. Before you invest, you should read the prospectus carefully and consider investment objectives, risks, charges and expenses. The product prospectus and underlying fund prospectus contain this and other important information. Investing involves risk.

Guarantees and protections are subject to Nationwide's claims-paying ability. They do not apply to the investment performance or safety of the underlying investment options.

Investment products are not FDIC-insured, may lose value and have no bank guarantee.