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Life Insurance

Help clients understand variable universal life insurance

Variable universal life insurance (VUL) is a permanent life insurance policy that has a cash value attached to it that can be invested to increase the overall value of the account. Are your clients curious as to whether a VUL policy could be right for them? Read on to learn more about how to communicate the benefits and basics of VUL with your clients.

The benefits of variable universal life insurance

A VUL policy is a permanent life insurance policy. It provides potential for greater earnings by allowing the owner of the policy to put a certain amount of the cash value component of the policy into a variable account made up of investment funds. The amount earned, of course, depends on market performance, but can be significant. The cash value in a VUL policy could be used, for example, to pay off debts or a child's tuition fees.

Here are four benefits you should talk about with your clients:

  • Lasts for a lifetime — A variable universal life insurance policy provides coverage for your client's entire life, as long as the required premiums are paid to keep the policy in force.
  • Cash value grows tax-deferred — One of the biggest benefits of a VUL is that any accumulated cash value of the policy is tax-deferred.
  • Access to cash value — Your client can use the cash value of the policy at any time for any reason. Keep in mind, however, that there can be tax consequences.
  • Active investment options — A VUL policy is a great option for a client who wants to actively manage their life insurance policy because a VUL gives them the freedom to allocate the cash value among the available investment options.

Basic VUL terms for clients to know

  • Surrender charges — A fee that the owner must pay during the early years of the policy if he or she decides to withdraw money. Doing so will also reduce the cash value and death benefit of the policy. These charges can be sometimes be fairly high in the initial years of the policy.
  • Risk tolerance — A VUL should only be considered for clients who can afford the increased cost to keep the policy in force should the chosen investment options perform poorly.
  • Flexible premiums — With a VUL, you can make unscheduled premium payments to repay policy loans or contribute to cash value.

Making the VUL decision

It's important to give your clients the information they need during the comparison of a VUL policy with other life insurance policies, especially for first-time buyers.

To help determine if a VUL policy makes sense for them, start by asking two simple questions:

  • Are you comfortable taking on market risk in order to receive higher cash value growth?
  • Is it important to you to have flexibility in allocating the cash value of the policy the way you see fit?

If your client answers “yes" to these questions, talk to them about the pros and cons of a VUL policy. Doing so will give them the information they need to build a secure future for their loved ones.


Investors should carefully consider the investment objectives, risks, charges and expenses of the applicable variable universal life insurance policy and its underlying investment options before investing. This and other information is contained in the prospectuses for the applicable variable universal life insurance policy and its underlying investment options. Investors should read the prospectuses carefully before investing. Prospectuses may be obtained by contacting PLICO at 800.265.1545.




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