Variable Whole Life

In-Depth Description - Variable Whole Life

This product combines permanent insurance protection with a flexible investment plan that allows the policyowner to choose to invest premiums and cash values among a broad range of investments. Under such a policy, there is no guaranteed minimum cash value. The policyowner bears all the investment risk associated with the policy. There are two types of variable life insurance - variable whole life and variable universal life.

Under a variable whole life policy the death benefit may increase or decrease depending on investment performance, but will not fall below the guaranteed minimum, provided the required premium is paid.

Variable universal life policies (VUL) provide the policyowner with the flexibility to vary the timing and amount of premiums and the face amount of coverage, much like the fixed interest rate universal life policy. The primary difference is that under the VUL design the policyowner directs the investment of cash values among a variety of investments and assumes all of the investment risk. In addition, most variable universal life policies do not guarantee a minimum death benefit.