Variable Universal Life Insurance

Variable life insurance is a permanent life insurance policy that allows the policy owner to invest the cash value in stocks and other securities, through mutual funds run by the insurance company. With a variable life policy, both the death benefit and the cash value depend on the performance of the chosen investments, which can go up or down. There is no guaranteed minimum interest rate for the cash value, as there is with other permanent life insurance policies. Variable life shifts the investment risk of the policy from the insurance company to the policy owner.

The policy owner decides how much of the net premium (the amount left after mortality and other expenses are paid) will be invested in different areas: stocks, bonds and short-term money-market funds. (Policy owner investment funds are segregated from the insurance company’s general accounts so that they reflect the actual experience of the investments chosen.) Because the policy owner decides where the money is invested and bear the risk of those investments. Poor fund performance can also mean that the cash and/or death benefit may decline. Variable life is considered a security and is the only kind of life insurance sold by prospectus.

Additional Variable Universal Life Insurance Resources

  • In What Scenarios Should Variable Life Be Considered?
  • Choosing a Permanent Life Insurance Policy
  • What Does Variable Life Cost?