Choosing Investments Within Your Variable Universal Life Insurance Policy by pfinancecr


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									Choosing Investments
Within Your Variable Universal Life Insurance Policy

  Choosing Investments Within Your Variable Universal Life Insurance Policy

  A variable universal life insurance policy, known in the insurance industry as a "VUL,"
  has many benefits. A VUL offers permanent life insurance and allows you the option
  to invest your cash value funds as you see fit within the policy.

  Apportionment of Your Money When You Purchase a VUL

  Unlike a term life insurance policy, a VUL builds cash value. This cash value accrues
  because a part of your insurance premium is applied to pay for the life insurance
  portion of the policy while the rest of your premium is placed in a separate account
  where it can earn more dollars for you.

  Restrictions on managing the cash account for your variable life insurance policy are
  many as the Security Exchange Commission, the SEC, oversees such accounts due to
  their volatile nature. At the time you purchase your policy, you're required to designate
  into which type of investment accounts your money will go.

  How Cash Value Accounts Function in a VUL

  For all practical purposes, your cash value account functions as a mutual fund. In
  many VULs, the buyer has 10 to 20 choices to invest their cash value dollars. With so
  many choices, how do you choose which one is right for you?

  Review these points when choosing VUL investment options:

     1. Consider your overall financial goals. Just as with any investment, you can
        align your VUL investment choices with your financial goals, choosing
        conservative or aggressive investments, or somewhere in between, depending
        on your level of risk tolerance.

       For example, if you want aggressive growth and know the financial
       market, you'll be more likely to select aggressive growth vehicles offered
       within your VUL.

       On the other hand, if you're more conservative in your investment goals,
       you might stick with more "fixed" type of investments offered within your
       VUL, like a money market fund.

2. Recognize the limits of your VUL. The company sponsoring the policy limits
   choices for investments in VULs. Shop around before you purchase your VUL to
   find options that you're most comfortable with.
       For example, Insurance Company 'A' might offers 3 choices for your VUL
       investments (such as stocks, bonds and money market), whereas
       Company 'B' offers 15 choices (a variety of equities, plus real estate
       bonds, high-yield corporate bonds and various other investment vehicles).

3. Think about diversification. Another important element related to investment
   choices for your VUL policy is diversification. Do you feel more secure with
   many smaller investments?

       Keep in mind that the larger the number of investment vehicles you
       select, the more you'll probably pay because you'll be charged a separate
       fee for each of these vehicles.

       Some financial experts believe it's smarter to designate just 2 or 3 investment
       vehicles to limit the amount of your money that goes to pay investors' fees for
       your VUL policy.

4. Take overall investors' fees into account. Bear in mind that the premiums for
   VULs are double or even triple the amount you would pay for a term life
   insurance policy, largely due to the costs of accumulating and managing the
   funds found in the separate cash value accounts.

       Ensure you understand how and when such fees will be charged, as well as
       the amounts of fees before you buy a VUL.

5. One option, if available, is to the let experts manage VUL cash funds. In the

                                        event you're unsure about your capacity to make investment decisions, ask
                                        your VUL agent if you have the option to have the company's management
                                        professionals manage the cash funds for you. This move, of course, would be
                                        most wisely done before purchasing a VUL.

                                   You have options when it comes to selecting how to invest your cash value monies in
                                   your VUL. Ensure you understand the ins and outs of your VUL before purchase. As with
                                   any investment, remember you can incur financial gains or losses over the short or
                                   long term based on decisions regarding your VUL.


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