Universal Variable
What Does Universal Variable Mean?
A universal variable, also known as variable universal life insurance, is a life insurance policy that provides both a death benefit and an investment component. The investment portion is allocated to a separate account, where it can be used for stocks or bonds, while the death benefit remains guaranteed.
Insuranceopedia Explains Universal Variable
Like any other life insurance policy, a universal variable policy provides a death benefit to the policyholder. What sets it apart from standard life insurance is its investment feature. A portion of the premium is allocated to a separate account, allowing the policyholder to invest in securities such as stocks and bonds of their choice. In the United States, earnings from these investments are tax-deferred.
However, the policy carries an inherent risk: investments may not generate positive returns. In such cases, the policy might not accumulate any cash value.
