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Policy Types

Understanding variable universal life insurance

Universal Life Insurance, a type of permanent life insurance, comes in different varieties. Variable Universal Life offers the potential for cash value growth through investment funds.

Not all life insurance policies are alike. Here, we're looking at the basics of a variable universal life (VUL) insurance policy that includes what it is, how it works, and a few of the pros and cons.

How variable universal life insurance works

Like whole life and universal life (UL) insurance, VUL is a permanent* life insurance policy with the potential to earn cash-value over time. It's similar to UL insurance, but instead of earning a specific crediting rate on the cash-value component, VUL allows you to put some or even all of the cash-value you may have in your policy, into a “variable account” comprised of investment funds. The dual nature of VUL provides you with valuable life insurance coverage, along with a cash-value component that permits you a certain degree of control over where you want to allocate the cash-value portion of your policy for greater earning potential along with the market risk that comes along with it.  

Advantages of variable universal life insurance

  • A minimum guaranteed death benefit that won't decrease** as long as you continue to make your minimum premium payments on time
  • Flexible minimum and maximum premium payment options
  • The potential to earn higher than average returns compared to other types of permanent life insurance
  • Permits you to maintain a certain level of self-directed control over how your cash value is invested 
  • Allows you to better control your individual risk tolerance

Disadvantages of variable universal life insurance

  • While you may experience better than average cash-value growth with a VUL, you could also experience a decrease in your cash-value due to poor performance of your investment options.
  • Fees that are associated with a VUL may be higher than with a universal life insurance policy
  • VUL is more complex than most other forms of life insurance and should be monitored closely throughout the life of the policy.
  • VUL is typically subject to surrender charges for a period of up to 15 years (more or less depending on the carrier) which can be very high in the early years of the policy.

Because of its cash value potential, a VUL can be a way for you to complement your retirement nest egg, while at the same time, have the life insurance coverage you need. For more information on other types of life insurance including universal life and indexed universal life, visit the Protective Learning Center.


*As long as required premium payments are timely made.

**Unpaid loans and partial withdrawals reduce cash value and death benefit.



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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 for Protective Variable Universal Life policies may be obtained by contacting PLICO at 800.265.1545

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.