What is Variable-Universal Life Insurance?
Answer:
A variable universal life insurance policy is a type of permanent life insurance policy


that has both a death benefit as well as cash value that grows tax-deferred over time. When you have this type of insurance, you can borrow against the cash value or surrender the policy in exchange for the accrued cash value. Because it is a permanent policy, as long as the policy is funded properly, it will not lapse unless you surrender it.

This type of life insurance does not have a set premium; rather the premium fluctuates within a range. With variable universal life insurance, you select the investments that the cash value component is invested in. Good performance translates into lower premiums while poor performance means higher premiums.

These policies have a death benefit along with an investment component. If your investments are strong, the value increases. However, the investment risk is shouldered by the policyholder rather than the insurance company. Poor investment performance can eat away at any cash value.

Variable universal life insurance policies take a great deal of investment knowledge and planning in order to work as expected.
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