A variable universal life insurance policy combines features found in both “universal” life policies, and “variable” life policies.
As with a variable life policies, a variable universal contract permits a policy owner to allocate a portion of each premium payment to one or more investment options, in separate accounts, after a deduction for expense and mortality charges. An annual statement detailing the expenses, charges, and credits allows a policy owner to track performance over time.
Following universal life policies, a variable universal contract permits the owner of a policy, within certain guidelines, to modify the policy death benefit, and change the amount and timing of premium payments, to meet changing circumstances.
Because the investment options available inside a variable universal life policy usually involve securities (e.g.,
stocks and bonds), the Securities and Exchange Commission (SEC) requires this type of policy to be accompanied by a
prospectus. The prospectus provides detailed information on how the policy works, its risks, and all expenses
or charges involved. The SEC also requires individuals selling variable universal life policies to be licensed
to sell securities.
Here are some common uses of Variable Universal Life Insurance.