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What is Variable Universal Life?

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Variable universal life insurance (also VUL, for short) represents a hybrid form which combines the best features of two insurance types into one which offers superior flexibility.

This trait extends to almost every aspect of this insurance, within limits, of course.

You are in control over your death benefit as well as the investment opportunities which make up the saving portion of this type of insurance.

The Components of Variable Universal Life Insurance

variable life insurance graphIf you’re familiar with the different types of insurance, you’ll recognize this kind includes two options for insurance, variable life and universal life.

Variable universal life insurance combines elements of the two types into a third one which offers more flexibility and customization to fit your insurance and investment needs.

Flexibility is the keyword with this form of insurance.

Variable Life Insurance

We’ll begin by discussing the two components to show how they fit into the variable universal life insurance plan. As the name suggests, flexibility is at the crux of this insurance. It exists with the type and number of investment decisions you can make.

The limiting factor with variable life insurance—and all investment in general—is the amount of risk you’re willing to accept.

Investments naturally carry some risks for the investor.

How much you’re willing to take on is driven a function of your overall investment strategy. You might consider variable life insurance as part of a diverse portfolio which can leave you open to different options.

As you may guess, it’s essential you search variable life insurance as a part of the grand scheme.

Universal Life Insurance

Universal life insurance contributes to the other aspects of variable universal life insurance.

It adds flexibility to the traditional definition of permanent life insurance. It differs from whole life insurance because you are in the driver’s seat when it comes to choosing your death benefit, saving options, and even premium payment.

There are some limitations, of course.

The advantage with universal life insurance is your policy can adapt to the changing conditions of your life and financial situation.

You’re not locked into a specific set of parameters. If your needs change, your policy can reflect how your needs vary. That’s part of what makes this type of insurance attractive.

The variability of life is inherent in its management.

What Is Variable Universal Life Insurance?

Okay, so now we know the nuts and bolts of each component, let’s see how they play out with variable universal life insurance. As you may guess, it is a popular type of insurance because it gives the insurer the freedom to customize their insurance.

There exists an additional perceived value of choosing the insurance and investment options you prefer.

Death Benefit Options

The changes you want to make are not without costs.

For example, you can increase its death benefit if your financial situation changes with the birth of another child or a new business venture. However, you may need to undergo a medical examination to make sure you are insurable.

Likewise, if you decrease your death benefit, it may come with costs.

Nevertheless, you have a choice which provides value.

Depending on your situation, the hassle of an exam or surrender charges won’t make it a deal breaker. The value will exist with the flexibility to choose. You can opt for a fixed benefit or one which includes its cash value.

Investment Options

The second component of variable universal life insurance involves your investment options.

If you’re financially savvy, this fact on its own can make this insurance an attractive choice for you.

You’ll be able to indulge the amount—or lack of — tolerance for risk you have. Needless to say, you should understand how the markets work with a realistic idea of the risks.

You’ll do well to diverse your investments as you normally would do outside of the life insurance sphere.

However, in this environment, you’ll also need to consider the intentions you have with life insurance which exist in addition to your investments.

These factors will certainly affect how you approach the investment component since it directly impacts your beneficiaries.

Many people get life insurance regardless of type to ensure their spouse as an income replacement source. It may or may not be the primary one, but it is still part of the overall plan.

This s where the flexibility of the death benefit comes into play. You might consider this part the reliable portion. You may choose to take on some risk for the savings component because of it.

Pros and Cons of Variable Universal Life Insurance

The advantage of variable universal life insurance is to capitalize on the saving portion of your plan. If you choose wisely and the fates allow, you’ll reap the rewards of sound investments.

To do that, you’ll need to do some research beginning with the policy’s prospectus.

The risk exists with how a volatile mark may affect the death benefit.

Doing your homework is essential.

You’ll want to make sure there is a threshold for a minimum death benefit which exists regardless of how the market behaves. The reason you’re buying life insurance. If it was just investing, you could do it without getting an insurance company involved in the mix.

Cash Value Options

Other benefits of variable universal life insurance include those you’d find with other types of permanent life insurance.

As long as your investments are performing well, you have opportunities to take out loans based on its cash value. This offers additional chances to make good on your investment for other things such as educational expenses and other goals.

With these options in mind, variable universal life insurance becomes more of a full-featured investment opportunity. You can take advantage of options to improve your financial security while taking an active role in the future of your investment returns.

If you prefer this scenario, this insurance will tick off a lot of the criteria you may want in a life insurance policy.

Considering the Whole Picture

The obvious requirement for variable universal life insurance is knowledge. You need to understand your investment options as well as the risks of pursuing your choices. It requires background knowledge and a continued investment in keeping up with market trends for your best chances of success.

While it carries risks, it also offers great rewards.

Freedom and Adaptability

This type of insurance gives you a lot of freedom to adapt to the changing circumstances in your life. You can respond to both personal changes as well as variability in the markets.

It requires a commitment on your part to make the most of these opportunities. If you’re willing to invest the resources, you’ll be handsomely rewarded.

However, those risks extend to the insurer as well.

If you choose variable universal life insurance, make sure you invest in a company who is financially solvent. A solid standing with independent analysts such as A.M. Best and Standard & Poor’s is an excellent start.

Variable universal life insurance is a lifelong investment.

Variable universal life insurance combines some of the best features of variable life and universal life insurance in a package with enormous potential.

It requires knowledge on your part so you understand the benefits and risks of your investment options. If you are up to the challenge, you’ll reap the rewards of a sound investment in the future of you and your loved ones.


Jason Fisher

Jason Fisher is the founder and CEO of, LLC. and a multi-state licensed life insurance agent who has helped over a million Americans seek out affordable coverage, compare quotes, or get their family and businesses covered.

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