Variable Universal Life Insurance (VUL)
Variable universal life gives you the protection of a basically tax free death benefit along with the flexibility to tailor your policy as life needs are subject to constant change. Hence the word variable. If you are interested in growing your wealth, VUL might be a good fit. Reason being it gives you the chance to build even more cash value than other types of permanent life insurance. However its imperative to know the policy’s cash value is invested in the market and can fluctuate with the value based on market volatility.
Here are some of the key elements of VUL policies:
- Death benefit: The death benefit of a VUL policy is typically guaranteed, but it can also increase over time based on the performance of the policy’s cash value.
- Cash value: The cash value of a VUL policy is invested in a variety of subaccounts, which means that its value can fluctuate based on the performance of the underlying investments.
- Premiums: You can make regular contributions to your VUL policy, and you can also make withdrawals. However, if you make too many withdrawals, your policy’s death benefit may be reduced.
- Fees: VUL policies typically have higher fees than other types of life insurance policies
Here are some of the risks of VUL policies:
- Investment risk: The value of the policy’s cash value can fluctuate based on the performance of the underlying investments. This means that you could lose money if the investments perform poorly.
- Surrender charges: If you surrender your VUL policy within the first few years, you may have to pay surrender charges. These charges can be significant, so it is important to read your policy carefully before making any withdrawals.
- Fees: VUL policies typically have higher fees than other types of life insurance policies. These fees can eat into your investment returns, so it is important to factor them in when making your decision.
If you are considering a VUL policy, it is important to talk to an insurance professional to get more information Get in touch with one of our experts and we will walk you through the process.