Variable universal life insurance is a unique type of whole life insurance that combines the features of variable whole life with the features of universal life insurance. In addition to the face value of this type of policy, you also have the ability to choose the funds the policy is invested in. The
result is the potential to earn quite a bit of money above the face value, creating a powerful financial tool for savvy investors.
The earning potential of life insurance investments will vary along with the general economy, so there is no guarantee that you will earn money on your policy. However, most variable universal life policies state that the policy will not pay less than the face value. What this means is that you might earn additional pay out or cash value, but the policy will always have a guaranteed minimum payout equal to the original value even if the investments go sour. So even if all of your investments go sour, the policy will still pay out the original value on your demise.
One of the drawbacks of a variable universal life policy is that you need to have a working understanding of the funds that your money is invested in. Blindly choosing funds could result in no earnings as well as losing the accrued cash value, while doing your homework and understanding how the markets work would give you relatively even odds on profiting from the policy. Bear in mind that life insurance is not meant to be a get rich quick option, and most people will only see moderate returns on even the best investment choices. It is possible to strike it big, to be sure, as
long as you have a viable strategy and make well-researched investment options.
Variable universal life insurance is one of the most expensive types of life insurance. The reason this type of policy costs so much is due to the fees and maintenance costs associated with managing the funds. All life insurance policies have maintenance costs associated with them, but this type of policy has more than most. So even though the potential to profit from the policy exists, you have to spend a little more to have that option.