Variable Universal Life (VUL) Explained: All about VUL
Variable Universal Life (VUL) is a life insurance product with investment benefits. If you don’t have an idea how a VUL product compares to a whole life policy, term plan, or even a mutual fund product, scroll down to read more.
Insurance and Investment Package
A VUL is an insurance product. No matter how you position this with other products, it will always have an insurance component. Thus, there are insurance fees involved here. While whole life insurance products are pure insurance policies, VUL has an investment component. Thus, you will see the term “Fund Value” in your proposal.
Guaranteed and Not Guaranteed
The insurance portion, or the Face Amount is always guaranteed. Although it has the potential to earn more, the not guaranteed portion is typically the the fund value, and the paying period. Unlike whole life policies that guarantee your dividends and endowment benefits, a VUL policy cannot guarantee your cash benefits because it is directly linked to investment instruments.
Add-Ons to a Variable Universal Life (VUL) Product
Depending on the product and company, a VUL product usually allows you to include added benefits called “riders”. Think of it as a booster to your plan. You can add health benefits, accident and disability benefits and more. Price would always depend on your age and gender, but you can consult us for a personalized quotation.
Positioning Variable Universal Life (VUL) Products to Portfolio
VUL Products are normally positioned as long term products. If you withdraw all your fund value, the insurance component will cease to exist. So if you want the insurance to still be in force, it’s a good idea to leave a certain portion of your funds to pay for the insurance cost. In a portfolio, it’s advisable to have a mix of life insurance, health insurance, VUL and Mutual Funds, depending on your goals.