This is part six in a series of articles explaining the various types of life insurance products. To start at the beginning please click here.
Variable universal life insurance works exactly like fixed universal life insurance with the exception that the investment performance of the cash value in the policy is tied to mutual funds instead of the fixed assets of the company. Usually the company provides the policy owner a list of mutual funds that they can split their cash value across. This is similar to how most employers allow you to divide up your 401K retirement accounts.
As with fixed universal life insurance, there are some estate planning reasons that may make variable universal life insurance a wise purchase, but you should be seeking advice from a trusted, professional financial advisor before you purchase a variable universal life insurance product.
Friday, January 11, 2008
Variable Universal Life Insurance Explanation
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2 comments:
I used to really like VUL's. But the market scares the bejeebers out of me anymore. There are great fixed UL's now that take the fluidity out of the policies.
Yes. With the chance of greater reward comes greater risk. VUL products allow for higher gains than the typical fixed product, but you also have the potential for losses. Every fixed UL product I've ever come across has some sort of minimum guaranteed rate.
To answer the demands of the consumer for the potential of variable gains with some downside protection many companies have come up with hybrid fixed/variable products that have minimal downside protection (e.g. minimum 0% return) with some of the upside potential of a variable product.
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