Variable Universal Life (VUL) insurance is a life insurance product with investment options. It's designed to help you protect your family's future — and give you access to professionally managed investments that can help you accumulate assets.
You can use a VUL policy for many of your planned financial needs, such as supplemental retirement planning, business planning, long-term care and education funding.
Advantages and disadvantages of variable life insurance
With a variable universal life policy, you can take advantage of potential market growth because your policy value is invested in underlying sub-accounts which are subject to market fluctuations. Your policy also has the flexibility to adjust to your changing needs.
However, a variable universal life policy puts greater responsibility on you .You assume the investment risk, and you select and monitor your own underlying investment options, instead of the insurance company doing it for you.
Keep in mind that as your life changes (for example, marriage, birth of a child or a job promotion), so will your life insurance needs. Make sure that these strategies and products are suitable for your long-term life insurance needs. Also, make sure you are able to continue premium payments so your policy doesn’t lapse if the market goes down. If you take a loan, withdrawal or partial or whole surrender, your death benefit may be reduced, your policy may lapse or you may face tax consequences.
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.