What is Variable Universal Life Insurance?

What is Variable Universal Life Insurance

Variable Universal Life Insurance refers to a type of insurance that creates cash value. With regard to a VUL, the cash amount can likely be invested in an array of varying accounts not linked to one another. The component found in the name has to do with the ability to put away money in different accounts with differing values. The reason why the values tend to vary is because they are placed into bond markets. Premiums will vary at certain times, starting with nothing and moving all the way up to their subsequent maximums, which are setup by the IRS and its relevant insurance plan.

A permanent life insurance setup such as this one is in place so that the benefit upon death will be paid if the insured individual dies, but there has to be enough of a cash value in order to pay the entire cost that the policy requires. There is absolutely no endowment age, and so this is a major advantage of VUL over other kinds of programs. With standard whole life policies, death benefits can only reach the actual amount given in the policy, and at the age of endowment, the face amount is paid in whole. So with either endowment or death, an insurance entity will retain any value that has been created over the years.

In the case that certain investments, which have been made in different accounts, do better than the common account of the insurance company, then a higher rate-of-return will take place. Mostly, the higher rates take place with those plans that belong to the fixed rates configuration of the whole life plan. With a combination of this magnitude, which refers to the amassing death benefit, a higher value might be awarded to the beneficiary than that which typically belongs to the whole life policy.

There are regulations that belong to the VUL providers, so it makes sense to become acquainted with what some of them are. A representative that provides a VUL has to be working in regulation with the securities and laws of the country by which it operates. Because these are in fact life insurance policies, VULs can only be sold by those providers that have all of the proper licensing. In addition, it is only possible to sell insurances in the locations of which the rules apply. Lastly, the insurance company itself has to be licensed as an actual insurer—anything short of this leaves all parties involved operating outside of the context relating to the policy.