Variable Universal Life Insurance
Variable universal life insurance is a type of permanent life insurance.It has flexible terms and investment possibilities. With a variable universal life insurance, you can change, within limits, the death benefit and the timing and amount of your premiums. It also lets you invest your cash value in professionally-managed funding options that reflect the performance of underlying investments such as stocks and bonds.
Flexibility is one of the benefits with variable universal life insurance. . You can pay the premium monthly, quarterly, semi-annually, or yearly. You can also change the premium frequency.You can increase or decrease them, within limits, and even stop and restart them.You can change the amount of insurance. You can allocate your cash value among many funding options.
Variable universal life insurance offers great tax advantages.The death benefit is free of federal and state income taxes. When you make transactions among different investment options, no income tax is due.As long as the policy is in force, you can access the cash value in the form of a loan, and the realized gain may not be taxed.
The cash value in the universal life insurance can benefit you financially in many ways. You can use it to supplement your retirement saving, fund a college education, or pay premiums.But the investment options in the separate accounts also have risk. Depending on the market and the particular fund, the performance of the cash value may not meet your expectation. Another concern is that although variable universal life insurance is a very flexible product, skipping or postponing premiums can affect your policy’s cash value and death benefit, and may cause increased premium requirement later.
As variable universal life insurance usually requires long term commitment from the investors, you need analyze your long term goal and financial situation before you make the investment.
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