Variable Universal Life Insurance policy is one of the policies offered in the Universal Life Insurance category. Like the other Universal Life Insurance policies, it offers flexibility of premiums and the ability to adjust the death benefit amount. The only difference to this policy is that the cash value amount is invested at the behest of the policyholder.
The policyholder is fully responsible for allocating the amount to the stock market as per his or her choice. Apart from this all gains and losses rely on the choice the policyholder has made. If the stock market collapses, the policyholder will have to bear the brunt of it, but if there is a windfall, the policyholder can reap its benefits too.A policyholder is allowed to withdraw money against the cash value accumulation, in case of an emergency. This amount is tax-free as it is withdrawn from the death benefit account, but it must be remembered that a sufficient balance must be maintained in order to keep the basic insurance operational. This means that the cash value be preserved and the premiums continued.
This kind of a policy is suitable for those who have a lot of money to invest and if the market ups and downs do not bother them. Also it is best suited to those who have a good knowledge of how the stock market works, as there are too many risks involved in a Variable Universal Life Insurance Policy. A sudden dip in the stock market can ruin the way your investments stand.
Variable Universal Life Insurance is an expensive policy and therefore not the right choice for the average investor, as the death benefit can fluctuate with a fluctuation in the stock market. However a minimum death benefit will be paid to the beneficiary in the event of the death of the policyholder during a low market condition.