Variable Universal Life Insurance

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Variable universal life insurance is similar to a regular universal policy in terms of the flexible premium options both offer. That is, you can increase your premium payments when you are able or decrease them during certain times of the year when you need your cash to pay for other things. However, variable universal life insurance offers you this added benefit – the ability to allocate your accumulating cash to several investment options, such as a fixed account.

If you are not satisfied with the dividends an ordinary life insurance plan offers and want to make your investment pay a little more, then variable universal life insurance is a good option for you. This potential for a higher return on investment comes, of course, with a higher risk. But you will have full control over which options to invest in.

What to Look for in a Variable Universal Life Insurance Policy

Since variable universal life insurance policies are riskier, always ask for complete information when considering an insurance company. Ask for all fund prospectuses you can get and investigate every aspect of the policy (i.e., read the fine print), such as:

• investment goals
• options and risks
• administrative fees
• other investment expenses

Benefits of Variable Universal Life Insurance

What if your investments fail? Variable universal life insurance gives you greater control over the cash value of your policy than any other type of insurance. You assume the risk for failed investments. The good news is that, although the cash value of the policy (the death benefit amount) depends on the success of your investment choices, even if you fail, a guaranteed minimum death benefit will still be paid to your beneficiaries upon your death.

Since variable universal life insurance has the features of a life insurance and securities contract, variable universal policies are regulated by Federal Securities Laws and, therefore, must be sold with prospectuses.

The Tax Advantages of Variable Universal Life Insurance

Unlike term life insurance premiums that are paid with after-tax dollars, variable universal life insurance premiums can be paid with your pretax dollars. This means that you can defer paying taxes on the portion of your income allocated as premium payment and can lower your overall tax liability each year that your variable universal life insurance policy is in effect.

Moreover, a variable universal life insurance policy gives your surviving kin a death benefit COMPLETELY FREE OF TAX. Under this type of policy, it is very possible that you will never have to pay taxes on the portion of your income that goes into your variable universal life insurance fund. You get all the tax breaks, the flexibility to invest your money, and an access to policy withdrawals and policy loans at low repayment rates. However, since variable universal life insurance does come with a risk to your money, you may want to explore all your other options first.

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