In a previous article we were discussing universal life insurance and what its advantages and disadvantages are; we saw how there are several types of paying for it, such as the single premium, the fixed premium or the flexible premium. In this article we are going to talk about a similar type of insurance, the variable universal life insurance, which is a rather complex way of handling your coverage and money. To begin with, you have to be really good at finances in order to be able to understand and utilize this policy in all that it has to offer, but once you get the hang of it you can really benefit from the multiple options it offers.
A variable universal life insurance allows you to direct its cash value to various separate accounts which can be used to invest in stock or bonds; this means the risk of losing some of your money is greater, but the winnings can be very high if you know what you are doing. The normal type of universal life insurance can also be used as collateral, as a loan, withdrawal and so on, for various extraordinary expenses, but with the variable you can actually use the cash value to invest.
Both these types of insurance were developed from the whole life insurance, but both their insurance costs are calculated on a renewable term life insurance which is made each year. They can both require paying for bigger premiums, but they also have certain advantages and a certain flexibility which others don’t. One example is the flexibility of the premiums, which can be increased or decreased, depending on how the customer and the insurer agree. Another big advantage is the possibility of adjusting the death benefits, increasing or decreasing them upon preference.
If you are interested in variable universal life insurance, contact several companies for life insurance quotes before making a decision; usually, your contract will specify a minimum premium and a maximum premium. You will of course decide upon a sum with your insurer, but you have the opportunity to change it to those limits later on if you so wish. One downside is the fact that you get a bit more responsibility when it comes to the death benefits; whereas a normal policy offers the death benefits as long as the monthly payments are on time, with the universal insurances you have to make sure that the cash values of the policy are sufficient to cover administrative expenses and other costs of insurance.