What if you could protect your loved ones and accumulate assets at the same time? You can with variable universal life insurance, an innovative financial tool that combines death benefit protection with upside cash value potential.

Variable Universal Life Insurance

At its core, variable universal life insurance is similar to other types of permanent policies. You choose a death benefit amount to meet your needs. The insurer calculates a minimum required premium to keep the policy in-force. As long as you meet the minimum premium requirements, policy stays active and the death benefit remains available to protect your beneficiaries, no matter how long you live.

However, variable universal life insurance (VUL) differs from other permanent policies in the way that the policy’s cash value grows. You have unlimited upside potential, as well as downside risk. Below are some of the ways in which a variable universal life policy could help you reach your financial goals:

Upside Potential

As is the case with other permanent policies, your premium in a VUL policy is allocated to two different purposes. A portion of the premium is used to pay the cost of the death benefit. The other portion is allocated to the policy’s cash value.

In whole life and universal life policies, your cash value grows through interest accumulation. However, in a VUL policy, you can allocate your cash value to subaccounts, which are similar to mutual funds.

Most policies offer a wide range of subaccount choices so you can choose an allocation that best fits your goals and risk tolerance. You can choose to be aggressive, conservative, or somewhere in between depending on your needs and goals.

The benefit of a variable policy is that you have the opportunity to grow your cash value based on market returns. That could potentially mean returns that are substantially higher than you would experience in a whole life or universal life policy.

Of course, the potential return also comes with potential risk. It is possible to lose money in a variable universal life policy. If you experience negative returns, you may need to pay higher premiums to keep the policy in-force. It’s important to understand the risks before moving forward with a VUL policy.


With a variable universal life policy, you aren’t locked into a set premium or death benefit, so you can adjust your protection as your needs change over time. As your cash value grows inside your policy, you can choose to use those funds to skip premium payments or even permanently reduce the premium amount.

You can also use your cash value to increase your death benefit amount without undergoing additional underwriting. This could be helpful if you decide you need additional protection in the future, but want to avoid underwriting because of new health issues. Some policies even allow you to reduce your death benefit amount.

Tax-efficient Income

Variable universal life policies are helpful tools for protecting your beneficiaries and loved ones. However, it can also be a powerful accumulation vehicle and even a source of tax-efficient supplemental income.

If your cash value grows substantially over time, you may soon find that the funds in the account are more than enough to pay for the cost of the insurance. That could give you extra cash to use to fund retirement, college for your children, or other big financial goals.

You can take tax-free distributions from your policy through the loan provision. You simply borrow money from the policy’s cash value. Since the distribution is a loan, it isn’t taxable. You have to repay the loan, but you can do so over a long period of time via your regular premium payments. If you don’t repay the loan before you pass away, the balance is simple deducted from the death benefit amount.

Ready to discuss variable universal life and how it may fit into your wealth management plan? Let’s talk about it. Contact us today at America’s Annuity. We can help you analyze your needs and develop a strategy.

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