How to Compare Variable Life, Variable Universal Life and Universal Life Policies

A Variable Life (VL) or Variable Universal Life (VUL) prospectus generally discloses more about expense charges than is disclosed in a UL policy illustration and contract. VL and VUL have higher expenses resulting from the need to prepare prospectuses, to register with the SEC, and to provide investment flexibility.

Front-end sales loads, premium tax loads, and administrative charges on VUL and UL do not differ materially. Surrender charges on VUL policies may be lower than those on UL to enable the VUL to comply with SEC limits on sales loads. Investment expenses are higher on VL and VUL because the fee paid to the investment manager is usually higher than the typical investment expense for a UL policy.

The table above compares and contrasts the key features of UL, VL, and VUL. As the table shows, VUL combines most of the advantages of UL and VL. Figure 11.2 shows how VUL and UL compare from an investor’s perspective.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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