Universal life insurance, a type of permanent life insurance, comes in different varieties. Variable universal life offers the potential for cash value growth through investment funds. Show
Understanding variable universal life insuranceNot all life insurance policies are alike. Here, we’re looking at the basics of a variable universal life (VUL) insurance policy that includes what it is, how it works, and a few of the pros and cons. Variable universal life insurance is a permanent life insurance policy that allows for growth. The cash value of a variable universal life policy can be invested to grow the value of the account. How variable universal life insurance worksLike whole life and universal life (UL) insurance , VUL is a permanent* life insurance policy with the potential to earn cash-value over time. It’s similar to UL insurance, but instead of earning a specific crediting rate on the cash-value component, VUL allows you to put some or even all of the cash-value you may have in your policy, into a “variable account” comprised of investment funds. The dual nature of VUL provides you with valuable life insurance coverage, along with a cash-value component that permits you a certain degree of control over where you want to allocate the cash-value portion of your policy for greater earning potential along with the market risk that comes along with it. Who can benefit from variable universal life insurance?Before investing in a VUL policy, it’s important to assess if this is the best type of life insurance for you. Because VUL involves market investments, there is some market risk. Those who are risk averse may wish to investigate other life insurance options. However, for those who are comfortable proactively managing their investments, VUL may be a good option. Advantages of variable universal life insurance
Disadvantages of variable universal life insurance
Tax and retirement implicationsVUL can serve as a resource for retirement and tax planning with its market-based cash value growth potential and tax advantages. Consider some of the retirement and tax advantages that come with VUL.
If you don't qualify for a Roth IRARoth IRAs can be a great way to save for retirement. However, if you're in a high-income tax bracket, you may not qualify for a Roth. The Internal Revenue Service has a set of rules to qualify individuals who can contribute to a Roth IRA. One set of rules pertains to income limits. If your income exceeds a certain amount, you will not be allowed to contribute to a Roth IRA. With a VUL, individuals in high-income brackets can allow any cash-value growth to build over time, similar to after-tax contributions to a Roth IRA. Key takeaways of variable life insuranceBefore deciding if VUL is right for you, consider your goals for purchasing life insurance. This type of policy offers a way to help provide for loved ones after your death, while simultaneously growing cash value that can be used in any way you choose. Because of its cash value potential, a VUL can be a way for you to compliment your retirement nest egg, while at the same time, have the life insurance coverage you need. For more information on other types of life insurance including universal life and indexed universal life, visit the Protective Learning Center. *As long as required premium payments are timely made. **Unpaid loans and partial withdrawals reduce cash value and death benefit. *** Loans outstanding at policy lapse or surrender before the insured's death will cause immediate taxation to the extent of gain in the policy. Investors should carefully consider the investment objectives, risks, charges and expenses of the applicable variable universal life insurance policy and its underlying investment options before investing. This and other information is contained in the prospectuses for the applicable variable universal life insurance policy and its underlying investment options. Investors should read the prospectuses carefully before investing. Prospectuses for Protective Variable Universal Life policies may be obtained by contacting PLICO at 800.265.1545. WEB.1684.07.15 What are the characteristics of variable universal life policy?Variable universal life is a type of permanent life insurance policy. With features that include cash value, investment variety, flexible premiums and a flexible death benefit.
Which is not a characteristics of a variable life policy?Which of the following is not a characteristic of a variable universal policy? The variable universal life policy DOES have cash value that varies with the performance of the investment. The correct answer is: It has no cash value.
Which of the following is a characteristic of variable life insurance?The Features of Variable Life Insurance
Pays a death benefit. Guaranteed death benefit. Fixed premiums. More investment options.
Which of the following is a characteristic of a universal life insurance policy?Flexibility is a fundamental characteristic of universal life insurance.
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