Variable Universal Life (VUL) Insurance

As in the variable life insurance product, the VUL also has the opportunity to achieve large gains which are tax-free to the beneficiary.

The variable universal life insurance policy combines many of the features of a whole life policy, a variable life policy and a universal life policy. The primary features are:

• premium flexibility;
• separate account control;
• assumed rate of interest;
• product is a security
• death benefit flexibility.

Initially, the insurance policy has a specified death benefit and a minimum scheduled premium payment designed to meet the first year’s mortality and expense charges. After that, the policyowner can pay into the plan whatever the policyowner wishes to pay as long as the cash value continues to cover the mortality and expense charges. If the performance of the separate account is significant the first year and results in annual gains, the policyholder may never have to pay a premium again.


Generally, within the separate account, the policyowner has several investment options created by the insurance company to select from when the initial premium is paid into the policy. The investment options may be mutual funds or other investment securities set-up by the insurance company and they may be graded from conservative to high-risk investments. The policyowner can redirect the investments without charge, usually once each year, to take advantage of or to speculate on the policyowners perception of the market.
The death benefit options are similar to the options discussed in the universal life insurance section.
Partial withdrawals may also be made from the VUL policies.

* * *

This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. Consult your financial or tax advisor for specific questions. For information about your specific insurance needs or situation, contact your insurance agent. Before investing, understand that variable annuities, mutual funds and variable life insurance products are subject to market risk, including possible loss of principle. All individuals selling variable annuities and variable life insurance products must be licensed insurance agents and registered representatives. Variable life products allow the contract holder to choose and appropriate amount of life insurance protection that has an additional cost associated with it. Our articles are intended to assist in educating you about insurance generally, but they cannot provide personal advice. They may not take into account your personal characteristics, such as budget, assets, risk tolerance, family situation or activities, etc. which may affect the type and amount of insurance that would be right for you. In addition, state insurance laws and insurance company underwriting rules may affect available coverage and it costs. If you need more information or would like personal advice, you should contact an insurance professional.