Variable Universal Life (VUL) insurance is a flexible type of permanent life insurance that combines the features of both universal life and mutual funds as many of the investment options. With a VUL policy, you can adjust your premiums and death benefit while also investing your cash value in various market-based options, like stocks and bonds. This offers the potential for higher growth, but it also comes with increased risk due to market fluctuations.
Understanding VUL is essential for those looking for life insurance that offers both protection and investment opportunities. While the cash value can grow significantly, it can also decrease if the investments don’t perform well. Certain VUL policies do offer indexed crediting strategies like IUL, with an annual reset feature to lock in your gains. Since VUL is a registered investment product, oftentimes their IUL-like options have more creative index crediting strategies with greater upside potential but still with some sort of protective floor.