In the context of life insurance, especially products like Variable Universal Life (VUL), “unit value” refers to the price of one “unit” or share of an investment within the policy. Life insurance policies that involve investment accounts, like separate accounts, use unit values to track how much each part of the invested funds is worth. Unit values change daily based on the performance of the investments chosen, similar to the way stock prices rise and fall.
Understanding unit value is important because it affects the cash value of your policy. As unit values increase, the cash value in your policy can grow, giving you more benefits over time. However, if the unit values decrease due to poor investment performance, the cash value might also decrease.