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| Variable
life (VL) insurance vs. universal life (UL) and participating whole life (WL) | | Variable
life insurance is a type of fixed-premium whole life
insurance policy where changes in the
policy's cash values and death benefits are directly
related to the investment performance of its
underlying assets. Policyowners typically can choose
among several investment options for the assets
backing the policy's cash values. The various investment
options offered in the contract generally
possess different risk/return relationships and frequently
include a money market fund, a bond fund,
and one or more common stock funds. The policy prescribes
that the death benefit will not fall below
a minimum amount (usually the initial face amount)
even if the invested assets depreciate in value
by a substantial amount. Because the policyowner assumes
all of the investment risk, there is no
similar "floor" to protect the cash values. Variable universal life (VUL)
insurance has
recently become a more popular product than VL. VUL
combines features of both UL and VL and, in
essence, is the flexible premium version of
VL. |
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