Variable Universal Life Insurance
In the days prior to variable universal life insurance VUL), there was a concept of getting term life insurance at lower premium rates and then invest the money saved on growth --oriented products like stocks. This did make some sense in that the cash-value that one got from universal life insurance was usually less than what you got from investing on stocks and bonds.
But things have begun to change. With the introduction of the variable universal life insurance, you have the option of being covered for all your life, and reap the benefits of a term life insurance.
Variable Universal Life Insurance vs Term Life Insurance
With term life insurance you always have to keep renewing your policy. And every time you do so you will have to prove your insurability. This is not so with variable universal life insurance where you are covered for your entire life or at least till the age of 95. So you don't have to renew your policy. With term life insurance you have to renew your policy after certain periods the cost of the premiums also goes up.
Most of us go for term life insurance as it is inexpensive. Fair enough. But with term life insurance what we miss out on is the fact that at one point in time we can develop some medical problem. And once the insurance term is over we can never get another insurance policy. So the previous bargain of a few dollars doesn't really work. At the end of the day we might have to spend hundreds and thousands of dollars.
Benefits of Variable Universal Life Insurance
With variable universal life insurance, what you can do is have a part of your cash value accumulation invested in a growth-oriented product. So in a way it allows you to have the freedom of a universal life insurance but at the same time allows you to have the benefits you get from investing small amounts on term life insurance premiums.
One of the greatest advantages of variable universal life insurance is the flexibility it allows. With such policies you can actually pay a one time hefty premium and skip paying the next premium. So if you know that in the coming month your expenses can increase you can pay for the premium right now for the coming months so that you are free of any worries.
There is further flexibility that variable universal life insurance offers you. Suppose after a few years you think that you need some extra coverage for yourself. In such a scenario you can actually get that without any hassle with a variable universal life insurance. You can just increase the premium you pay and your coverage will increase. With term life insurance you don't have that option.
With a variable universal life insurance you can use the cash value you accumulate as collateral for bank loans. This is not the case with term life insurance. Here again, variable universal life insurance scores over term life insurance.
So there are many advantages. And they are quite evident.
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