Overview And Objectives Of Variable Universal Life (VUL) Insurance

Posted by IAG Insurance Inc on November 25th, 2022

A variable life insurance policy that accrues cash value is called universal life insurance. There are numerous ways to invest the collected funds in the policy. The policyholder selects the investments in the life and health insurance company following their financial objectives and risk tolerance. Because there is no "endowment" age, variable universal policies differ from whole-life policies. The age of the policyholder at which the policy's cash value will be precisely equal to the stated death benefit amount is known as the endowment age, commonly set at 100.

What Is The Process For Variable Universal Life Insurance?

The term "universal" refers to the policyholder's ability to pay premiums in various ways, up to the maximum amount permitted by the Internal Revenue Service of the United States. The only prerequisite for monthly premium payments is to reach a predetermined minimum sum needed to maintain the policy's status quo. Home health care medicare aids many people in accessing healthcare and treatment, and it is a valuable option for many recovering from accidents or surgeries.

The insured cannot make any payments if the policy has enough cash value to fulfill the minimum monthly premium amount. The policy's current cash value will be used to cover the minimum payment. (This is in direct contrast to whole life insurance, which has set premium payments that must be made to keep the policy in force.)

The word "variable" in the name refers to the fact that the policyholder has a variety of instruments to choose from, such as stocks and bonds, and that, as a result, the investment returns can and will change. Some insurance plans provide more than 30 sub-accounts for investing in any asset.

VUL Insurance Structure:

Simply put, variable universal life insurance combines a death benefit with a savings component. More flexibility is possible under the VUL policy, making management simpler. The savings component is credited with premium payments. As mentioned above, the savings component is further divided into sub-accounts that can be invested in various assets.

Benefits Of VUL Insurance For Taxation:

variable universal life insurance policy has various tax benefits. One of the main justifications for selecting a VUL policy over other types of life insurance is the tax benefits. The following are the main tax benefits that VUL insurance provides:

Up to the total amount of the policy's accrued cash value, the insured may take out policy loans from the policy tax-free. Taxes on investment gains are postponed until the policyholder withdraws cash from the policy's value after retirement. Death benefits granted to the insured beneficiaries are exempt from income tax (although they may be subject to estate taxes in some states).


It makes sense to combine life and health insurance policies. The only precaution you need to take is to ensure you have carefully read and comprehended all terms and conditions, including any exclusions, before signing any documents. The rest of life journey gets considerably smoother with the appropriate life insurance and health insurance plans.

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IAG Insurance Inc
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