What is Variable Universal Life Insurance?

Variable Universal Life Insurance: Pros and Cons

Variable universal life insurance and universal life insurance are very similar, but they do have some distinct differences. Here are the pros and cons of variable universal life insurance:

Pros: Variable Universal Life Insurance

• You can invest the cash value: Variable universal life insurance may be a good investment if these benefits appeal to your needs. First, the way you can invest the cash value in a variable universal life insurance plan may be useful if the mutual funds you choose perform well.


• Flexible premium payments: These plans usually have more flexibility around premium payments. You might be able to use the cash value to pay for premiums, but it depends on the company you are working with and their guidelines. Typically, the cash value can’t fall below a certain level, or the plan will lapse.⁶


• Flexible death benefit: Lastly, there may be flexibility around the death benefit of a variable universal life insurance plan. This depends on the company you choose, but you may be able to change the plan's face value over time.

Cons: Variable Universal Life Insurance

• Level of risk: The level of risk in variable universal life insurance is much larger because the money in the cash value account is directly being invested into the market. This means the cash value is at greater risk and isn’t guaranteed year after year.⁷


• Higher costs: There can be higher costs associated with variable universal life insurance. If you choose to borrow or withdraw funds, the premium payments can be more expensive than what they started at.⁸

Can I cash out a variable universal life insurance policy?

You can access the cash value of your variable universal life insurance policy in several ways, such as a policy loan and withdrawal. With a policy loan, you can borrow funds as needed using your cash value as collateral. You can enjoy a flexible repayment schedule and low interest rates. If you withdraw funds, you don’t have to pay anything back, but keep in mind this will reduce your death benefit.

Is Variable Universal Life Insurance a Good Investment?

Variable universal life insurance may be a good investment if it is planned wisely. However, there is more risk associated with this type of plan compared to whole and term life insurance policies. The higher risk can create a higher reward, but it can also lead to higher premiums and a drop in the plan's cash value.⁹

At Aflac, we do not offer variable universal life insurance, but we strongly encourage you to take a detailed look at each plan and company before committing to a policy.

Should I get variable universal life insurance?

To decide if you should get a variable universal life insurance plan, consider your preferences, coverage goals, and risk tolerance. If you want a policy with more flexibility that gives you control over your investments, this may be the right option for you. But if you want a less risky and complex policy, consider other options such as whole or term life insurance.

How Variable Universal Life Insurance Compares to Other Life Insurance Policies

If you’re not comfortable with the amount of risk within a variable universal life insurance plan, there are more secure routes to consider.

Term life insurance may be a better choice than variable universal life insurance if you only need coverage for a specific period of time. It may be a good option for young families looking to save money upfront or seniors factoring in long-term plans.

On the other hand, whole life insurance lasts the entire life of the policyholder and still has a death benefit and cash value component. It may be a smart move if you are looking for more stability, while still providing ample security for loved ones later in life.

Get a life insurance quote today

Variable universal life insurance is a policy that comes with more flexibility and risk. While we do not offer variable universal life insurance at Aflac, we can provide additional information around our whole life and term life insurance plans. Our plans are portable and affordable, and in some cases, you may be able to skip the medical questions. Start chatting with an agent today to learn more.