Many of us have heard about universal life insurance policies, but how many have heard about variable universal life insurance policies?  If you appreciate the investment properties of universal life insurance but would like a little more freedom, you should discuss a variable life insurance policy with your insurance agent the next time you meet.

The basic concept is the same between universal life insurance and variable universal life insurance.  How they each work is each premium period, a certain sum is subtracted from the account to pay for the cost of insurance. This amount is called the COI. Since the expected premium payment would often exceed the COI, the excess is kept in the account and invested to earn interest.

The difference between a universal life insurance policy and a variable universal life insurance one is the level of control the policyholder has over the excess amount in the account.  In a universal life insurance policy this amount is usually tied to a financial index selected by the insurer. Variable universal life insurance allows the client to select from various investments much in the same manner as mutual funds. This allows the client to take more chances as some of the options include higher risk/higher return investments.

Variable universal life insurance allows a person to combine saving, investing, and risk protection into one neat and tidy package.  Both types of policies allow for the policyholder to establish a life insurance policy while investing in the future.  The only difference between the two is if you want to be in charge of the investing or someone else.  The choice is yours.