Variable Universal Life Insurance Guide

by | Dec 4, 2015 | Whole Life Insurance


When it comes to life insurance policies there is one that stands out from the rest. This policy is known as the variable universal life insurance policy and it is one of the most expensive policies available for a reason. Unlike other policies, the variable plan allows you to take your return in your own hands by allowing you to allocate a portion of the premiums towards investments like stocks or bonds.
The variable universal life insurance plan is very flexible but due to the allocation for investment securities, the actual payout of the plan can rise as well as fall on any given day. It is also a relatively high risk life insurance plan. With the profits that you make every month, you can apply them towards the premiums but when there are losses, you still have to cover the premium with cash. Also, there can be severe financial repercussions if you pass away when the value of your investments are down because of the variable nature with this life insurance policy, though if you have done well you could possibly amass a large sum in death benefits through the variable universal life insurance policy. That said, these policies have a tax-deferred feature that may be especially attractive for high net worth individuals.

An interesting aspect of variable universal life insurance policies is premium flexibility, which means that keeping the policy in force typically requires no premium to be paid, assuming that there is sufficient cash value in the policy to pay for that month’s cost of insurance.

Because of its flexibility and the ability to increase the death benefits through years of good transactions, it is those same transactions which can actually cause your benefits to decrease if you make a mistake in an investment. Because this life insurance plan is considered to be an investment portfolio you will be able to withdrawal as well as borrow against it, but be careful, because if an investment goes sour then there is no longer a strong collateral for your loan taken out against it and this can put you in some serious debt.

If you are young you might be less worried about the risks associated with managing your own life insurance benefits; in this case a variable universal life insurance policy may be just right for you, giving you many years to perfect your investment techniques as well as the death benefit payouts for your family after you have passed on. There are variable universal life insurance pros and cons which you need to take into account when choosing to go with this and make sure to read the prospectus before agreeing to accept the policy plan.

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