Variable Universal Life Insurance

Variable universal life insurance refers to a type of life insurance that builds cash value. The cash value in this variable life insurance can be invested in a range of separate accounts which is similar to mutual funds. The contract owner can make a choice of a separate account out of the available accounts.

The component in its title, "variable" suggests this capacity to invest in volatile investments that is similar to mutual funds. The universal in the title refers to the flexibility the owner has in making premium payments. Similarly the premiums can vary from nothing in a given month up to maximums defined by the IRS code for life insurance . This flexibility is totally contrast to whole life insurance which has fixed premium payments that cannot be missed without lapsing the policy.

In one way this is also a kind of permanent life insurance. This is because the death benefits are paid on the event of death of the insured anytime up to the endowment period.

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