What is Variable Universal Life Insurance?

variable universal life insurance

With so many different types of policies and thousands of different insurance companies to choose from, find the perfect policy to fit your needs can be difficult. We are here to help clear up any confusion.

One of the most misunderstood types of policies is a variable universal life insurance plans, there are several different components of the insurance policy that you should be aware. Not understanding your insurance policy options could lead to dire consequences in the future.

Variable Universal Life Insurance Defined

variable universal life insurance

To put it simply, variable universal life insurance is a policy that allows you to build cash value inside of the policy and also has an investment component to the plan. On top of that, the premiums are flexible and can be changed depending on your financial situation. There are a lot of benefits to one of these policies, but there are also some disadvantages.

A variable universal life insurance plan is a combination of a savings account with a separate death benefit section. It allows you more customization with your coverage and gives you flexibility in how you manage your life insurance.

With these accounts, there are different separately managed accounts inside of the policy that is known as sub-accounts. Every year, the provider takes the money to pay for mortality costs and any policy fees that it costs to manage the policy. Everything else inside of the policy stays inside of in the separate accounts.

Variable Universal life insurance plans were created in the 80s. There were a lot of insurance professionals who were seeing incredible interest returns on whole life insurance, but universal plans were not getting the same sky-high returns. The solution? Variable universal plans.

The obvious advantages are that these policies give you life insurance protection plus flexibility that you won’t get with any other type of life insurance policy. Additionally, it has an investment component that is unique to these kinds of plans.

There are several disadvantages to these plans as well. They are not the most cost-effective form of life insurance. Because of all the add-ons and advantages, you’re going to spend more.

Some of the other disadvantages of these policies are the fees which come along with the plan. Because there is more management involved with these policies, insurance carriers are going to charge you more for the policy.

Additionally, there is a chance with variable life insurance that you will lose some of the value inside of the policy. Just like with any other investment, there is always the risk of losing value.

How do you know if one of these variable universal life insurance plans would be a good use of your money?

Life Insurance – Why you Need it

Every life insurance plan has different benefits, but all of them have one thing in common: protecting your family.

Your family members would be responsible for your mortgage payment, car payments, any student loans, business loans, and much more. They would find themselves with thousands and thousands of dollars of debt.

Getting the perfect amount of life insurance is a delicate balance of purchasing enough protection, but not getting more than you need. How do you know how much to buy? Math!

To get started, gather all of your debt information. This will include your mortgage, student loans, and any business loans or additional debts. Add all of those numbers.

The next factor to calculate is your annual salary. The secondary goal of a life insurance policy is to replace your stream of income for your loved ones.

Every year countless families lose a loved one unexpectedly. They suffer the pain of sudden loss, and on top of that, they find themselves with a pile of bills, which makes the situation a thousand times worse. Don’t let your family members become another one of these stories. Having adequate life insurance can make the loss of a loved one easier by relieving any financial stress that they would have felt otherwise.

Getting Variable Universal Life Insurance

Our agents understand the life insurance marketplace and can walk you through the application process to make it as smooth and stress-free as possible for you. Buying life insurance shouldn’t be a painful and frustrating process, and we can make sure that it isn’t. Contact one of our agents today to get the process started.

If you’re considering buying one of these plans, we highly suggest contact an experienced agent, like ours at Ogletree. We can look at your needs and determine if variable plans would meet your needs, you should try  traditional policy.

Want to get started? It’s as easy as using the quote form or our contact page.