VARIABLE UNIVERSAL LIFE
Variable Universal Life is tied directly into the performance of the market via mutual funds. When the premium is paid, a portion goes towards expenses and the actually cost of insuring your life. The rest is used to purchase mutual fund options. The cash value growth of your policy is determined by its investment performance. If the investment return is 30%, you receive a 30% return on the cash value. If the market receives a -30% return, you receive a -30% return. There is unlimited potential for high growth; however, there is no protection in a decreasing stock market.
Many people purchased VUL policies in order to capture the upside of the market. During years when the economy declined (2007-2009), these people lost a significant amount of cash value growth within their policies. For those who planned on using the policy growth for retirement, a significant portion of their retirement income was lost. A great alternative to protect yourself from these downward spirals in the market is an Equity Indexed Universal Life (EIUL) policy.
Variable Universal Life is tied directly into the performance of the market via mutual funds. When the premium is paid, a portion goes towards expenses and the actually cost of insuring your life. The rest is used to purchase mutual fund options. The cash value growth of your policy is determined by its investment performance. If the investment return is 30%, you receive a 30% return on the cash value. If the market receives a -30% return, you receive a -30% return. There is unlimited potential for high growth; however, there is no protection in a decreasing stock market.
Many people purchased VUL policies in order to capture the upside of the market. During years when the economy declined (2007-2009), these people lost a significant amount of cash value growth within their policies. For those who planned on using the policy growth for retirement, a significant portion of their retirement income was lost. A great alternative to protect yourself from these downward spirals in the market is an Equity Indexed Universal Life (EIUL) policy.
Why should I choose a Variable Universal Life policy?
Variable Universal Life policies may only be recommended if you are are willing to take on the full risk. You will be subject to high returns with no maximum; however, you will also be subject to negative returns. The potential for loss is greatest with a VUL policy. An Equity Indexed Univeral Life policy is good alternative for those seeking higher returns, but also wish to protect their principal investment.
