Variable Universal Life Insurance - The Pros and Cons
Variable universal life insurance is the perfect choice for the consumer who wants to have some control over his financial future. A variable universal policy allows you to combine the features of both a variable and a universal life policy. This means being able to choose from several investment accounts, flexible premiums as well as death benefits that are adjustable.
The death benefit on a variable universal life insurance policy may fluctuate according to how well the investments you have chosen perform. However, based on the good track record of the stock market over extended periods this kind of policy allows policyholders to accumulate a lucrative cash value. It should be remembered that short term stock market fluctuations are common and if you die during a slump you will be guaranteed a minimum death benefit.
What are the other benefits of a variable universal life insurance policy? Policyholders have more direct control of the cash value their beneficiary will receive when they die. This also means that the policyholder is absorbing most of the risks associated with his investments. For this reason VUL policies are always regulated by Federal securities laws and the SEC.
Your variable universal life insurance policy will offer flexible premiums and death benefits. This is based on how well your investments perform and can help ward of inflationary concerns that affect some other kinds of insurance.
On the downside a variable universal life insurance policy is usually a little more expensive than other policies. This is because your rates need to be high enough to pay for insurance, mortality and expense fees tied to the funding of your policy. You will also need to understand the stock market in order to invest your funds wisely and know how to manage your investment accounts.
A variable universal life insurance policy is best suited for a young person who has long-term investment goals.
