How do premium increases affect a Variable Universal Life policy?

Premium increases in a Variable Universal Life (VUL) policy can significantly impact its cash value and death benefits. When premiums are increased, policyholders are contributing more money to the policy, which often allows for an enhancement of both the cash value and the death benefit. This additional funding can be allocated to various investment accounts within the policy, potentially increasing the cash value over time.

However, there are also considerations regarding affordability. While higher premiums can improve the policy's overall performance, they may also create a financial burden for the policyholder, leading to a situation where maintaining the coverage becomes a challenge. If the increased premiums are not manageable, it could result in the insured feeling pressured to reduce or lapse their coverage, which could negate the benefits of increased contributions.

Therefore, while increased premiums can enhance a VUL policy, it is crucial that the policyholder assesses their ability to maintain these higher payments without affecting their financial stability.