Variable universal life (VUL) is a Whole of Life Investment Linked policy . It is a type of permanent life insurance policy with a built-in investment component that allows for the investment of the cash value . Like standard universal life insurance, the premium is flexible.
VUL insurance however, has a custodian account sometimes called a subaccount that allow for the investment of various investment instruments. The function of the subaccounts is segregated in most cases from a typical life insurance premium pool. The Policyholder or his own appointed asset manager is responsible for the performance of the insurance portfolio. Exposure to market fluctuations can generate significant returns, but may also result in substantial losses. This insurance gets its name from the varying results of investment in the ever-fluctuating market affecting the cost of insurance. If used wisely, VUL insurance offers increased flexibility and growth potential over a traditional cash value or whole life insurance policy.