What distinguishes a Variable Universal Life policy from whole life insurance?

A Variable Universal Life (VUL) policy is characterized by its flexible premiums and investment options, setting it apart from whole life insurance. In a VUL, the policyholder has the ability to adjust the premium payments and choose how the cash value is invested, typically across a range of investment portfolios including stocks, bonds, or mutual funds. This flexibility allows policyholders the opportunity to potentially grow their cash value more dynamically than in a whole life policy, which generally has fixed premiums and predetermined cash value growth based on the insurer's guaranteed interest rate.

Whole life insurance, in contrast, provides a guaranteed death benefit and cash value accumulation at a predetermined rate, with less potential for variability or growth based on market performance. The cash value in whole life policies grows at a set interest rate determined by the insurance company, rather than offering the investment choices available in a VUL.

This distinction in premium flexibility and investment options is critical in understanding how VUL policies provide greater versatility for policyholders looking for both insurance protection and investment opportunities.