You probably heard VUL before, especially from financial advisors of insurance companies. This is the most popular insurance policy since it has a unique benefit which is its investment component.
Variable Universal Life (VUL) is permanent life insurance where premiums (payment) you made will be used to pay for mortality and administrative cost and the remaining amount will be invested for potential growth.
It is variable since the investment performance varies on the market movement based on the type of funds you choose.
There are different fund allocation that you can choose from like bonds, money market, equity, index, and others.
ADVANTAGE OF VUL
Diversification is one of the strategies used by investors to reduce the effect of the volatility of the market. If you have stocks, mutual funds, crowdfunding, and business then VUL can be added to your asset portfolio and can give you protection.
The investment portion can be withdrawn. We all have plans and dreams that require a huge amount of money including kids education, dream house, and retirement. It will definitely cause us a lot of headaches getting a huge amount of money by the time comes. Getting a portion of our income and transferring it on a VUL as early as possible can help us achieve that goal easily.
Money works for us. We spend 8 hours of work and paid based on hours or days depending on the company. If we only have more than 24 hours a day, then we can work more than that. Working smart is now a trend, letting money works for you through investment can help you reduce time working for someone else.
DISADVANTAGE OF VUL
No one can predict what might happen with the economy, the same as the investment it may fluctuate anytime. Getting a VUL policy for 5 or 10 years paying period does not guarantee that you will only pay during that time. If your investment fund is not enough anymore to pay for the insurance then you are required to pay again to make sure your insurance is still in force.
Letting your money invested in VUL for a long period of time or not withdrawing funds can reduce the risk of lapsing. In that way, you can achieve a happy retirement or can transfer a huge amount of wealth to your family.
