Variable Life Insurance

Variable universal life insurance is permanent life insurance. As long as premiums are paid, a death benefit is paid to the beneficiary.

These policies are different from variable life insurance policies because they offer the policy owner some flexibility to change the premium payments and death benefit. The death benefit may be increased or decreased, and the premiums can also be increased and decreased as well as skipped. Variable universal life insurance policies may be purchased with one of two different death benefit options. One is a level death benefit and the second is an increasing death benefit. In addition, these policies accumulate cash values on a tax-deferred basis with the potential for higher rates of return than traditional whole life policies. The cash values of variable universal life insurance policies vary with the investment results of funds chosen by the policy owner. The policy owner is given a choice of investment options which are usually stock, bond and money market funds. Unlike universal life insurance policies which have guaranteed cash values, the cash values of variable universal life insurance policies are not guaranteed. The cash values of variable universal life insurance policies can be used for a variety of options:

The policy can be surrendered at anytime for the cash surrender value.
The policy owner can take out a loan and use the cash value as collateral.
The cash values may be used to pay premiums for a certain period of time.
The cash surrender value can be used for retirement income.

Variable universal life insurance policies are valuable because they can provide permanent protection and may accumulate cash values; however, these policies carry more risk than traditional universal life insurance policies. Individuals considering purchasing a variable universal life insurance policy should be experienced investors in equity investments.

The cash values of variable universal life insurance policies may also be affected by a life insurance company's future performance. Some factors that influence a life insurance company's performance are expenses and mortality experience.

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