What is Variable Universal Life Insurance?

With a variable universal life insurance policy, premium payments can be assigned to different investment opportunities to achieve potentially more cash value accumulation.

Variable Universal Life Insurance

Reasons to consider universal life insurance

Variable universal life (VUL) insurance offers maximum flexibility. However, with that flexibility comes responsibility- you’ll have to keep an eye on investment performances and make choices about where to put funds. Of course, this has risks and the potential for your policy’s cash value to decrease.

Benefits of variable universal life insurance

If you are looking for life insurance for financial protection and a form of investment, variable universal life could be a great option for you. Variable universal life gives the policyholder control over where your investments are going and an increased return rate compared to other life insurance options. 

Policyholders have more control and flexibility with VUL based on their needs. Premium prices and death benefits can be adjusted, and investments can be made at the policyholders’ discretion.

Variable life insurance at a glance


Although variable life insurance policies are older and less popular than VUL policies, there are still some out there. You can set a minimum death benefit amount with variable life insurance, but you could potentially pay out more if your investments do well. 

Variable life insurance advantages: 

  • Fixed premium payments throughout the duration of the policy. 
  • Death benefit guarantees. 

If you’re interested in having your life insurance policy also build wealth while also having the regularity of premium payments, this could be a good investment option for you.

Contact National Educational Services to speak with a life insurance agent who can help you learn what policy fits best. 

Investing with variable and variable universal life insurance


When you make a premium payment for a permanent life insurance policy, your premium covers the cost of insurance and fees. Then, the remainder of your premium is deposited into your cash account.

With a variable policy, you decide where the extra money in your cash account goes.

This will be up to the discretion of your insurance company as they will have options to choose from based on the way you’d like to invest your cash account. 

If your investments are doing well, it’ll increase the amount of death benefit that will be paid out to your beneficiaries at the time of your passing. If your investments do poorly, the insurer will still pay the minimum guaranteed death benefit amount to your beneficiaries. Remember, many VUL products don’t have a guaranteed death benefit in the policy.

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Life insurance FAQs

Life insurance can be confusing. Find answers to the most frequently asked questions.

Policy owner 
The policy owner is the person who owns the life insurance policy. In many cases, the policy owner is also the person who is insured by the policy. However, the policy owner may also be a relative of the insured, a trust, partnership, or a corporation.

A beneficiary is the person(s) selected by the policy owner to receive the life insurance payments upon the death of the insured.

Premiums are the payments made to the insurance company to purchase and keep a policy active.

Death benefit
A death benefit is the amount paid to the beneficiary at the time of the death of the insured.

Face amount
The face amount of the policy is the amount of the death benefit as stated in the policy. This does not include additional amounts that the policy may provide.

Insured/insured life
Insurability refers to how likely an applicant is to be offered coverage based on current health, medical background, family history and other factors.

When determining this the main factor to consider is the period of time you’ll need coverage, especially if you have children. If your children are young, twenty or thirty years of term life coverage would help your children get through college or secure their future. If your children are older and able to support themselves, you might consider a shorter term period that’s more appropriate for your needs.

Generally, the benefits received by beneficiaries after death are collected tax free. If you have a permanent life insurance policy, the funds accumulated over time would not be subject to income tax as long as the policy is still in effect. Finally, while withdrawals and loans reduce the value and death benefit, most are not taxable.

When choosing a life insurance company be sure they have exceptional customer service, competitive pricing, great claims payment history, as well as being financially sound. To learn more about company ratings online visit Standard and Poor’s, Moody’s, Fitch and Weiss.