Variable Life Insurance is a type of insurance which builds up the cash value. In this type of insurance the cash value can be invested in a wide variety of separate accounts which is similar to mutual funds which are contracted upon by the contract owner. The most significant advantage of using Variable Life Insurance termed as VUL is that it allows one to invest in multiple accounts which specify one to increase the value over time, meaning that there is potential to grow in much larger payout than fixed type life insurance policy.
Another advantage of VUL is that monthly payments are variable meaning that they are flexible within the limits of insurance policy. It might be possible that on a given month, a user might not opt to pay for anything at all but after a while they could pay for a very large amount which has been specified for the government. Payments to be made are up to the decision of policyholder as long as they make and maintain a minimum amount to pay up for costs involved in the policy.
Along with that there are various drawbacks in choosing a Variable Universal Life Insurance Policy. The first is that the costs and fees of the account are typically more than any other type of life insurance due to the transaction costs involved in making such trades.
The second is that investing in itself carries some risk, so that the value of policy would go down if the market performs better. As a result of which this variable universal life insurance policy is a better option for those who are younger and have a longer time to invest which would alleviate the risk by spreading it out with time.
