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Variable Universal Life Insurance: Policies
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Variable universal life insurance receives special tax advantages in the United States Internal Revenue Code. The cash value in life insurance is able to earn investment returns without incurring current income tax as long as it meets the definition of life insurance and the policy remains in force. The tax free investment returns could be considered to be used to pay for the costs of insurance inside the policy. See the 'Tax Benefits' section for more.
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UL or Universal Life Insurance is a type of life policy that was designed after the Whole Life Policy. It ... has a Cash Value and accumulates interest. The rate of interest on this type of policy may or may not be guaranteed by the insurance company that writes the policy. Often you will see this type of policy with a minimum possible interest rate but no cap on what the maximum can be. These policies are also designed to last until the insured is Age 95.
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Custom Variable Universal Life (CVUL) is a flexible premium variable universal life insurance policy. Net premium payments you make are invested in the investment divisions of the Separate Account. See the Policy and fund prospectuses for detailed information about the Policy, premium expense charges, monthly policy charges, and the divisions of the Separate Account.
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Variable universal life policies are life insurance products with an investment component, allowing policy owners to invest their assets among a selection of professionally managed funds that make up the separate account. Unlike nonvariable policies, the insurance company does not guarantee the cash value of these investment options. Since the policy values may vary either upward or downward based on the investment performance of the investment options selected, a variable universal life policy presents an investment risk to the policy owner.
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Variable Universal Life insurance blends the features of Universal Life, such as flexible premiums and adjustable death benefit, with a choice of investment options. The amount of the death benefit may increase or decrease, depending on the success of the investment options you choose. Your policy builds accumulated value, which you can borrow against or withdraw, according to the terms of the contract. 4
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The Variable in a Variable Universal Life (VUL) policy means that the cash value is invested in a separate account. The separate account consists of mutual funds. To offer this policy your financial adviser must be licensed as an insurance agent and registered with FINRA. The cost is the nearly equal with the EIUL. But there are no limits, either up or down, to your cash value. The performance of the underlying mutual fund is what the returns are based on.
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