What impact does a rising mortality expense have on the cash value of a VUL policy?

A rising mortality expense directly impacts the cash value of a Variable Universal Life (VUL) policy by leading to higher costs deducted from the policy's account. As mortality expenses rise, policyholders experience an increase in the cost of insurance, which is charged against the policy's cash value. This leads to a decrease in the available cash value over time, as more of the premiums paid are allocated to cover these increased costs rather than accumulating as cash value.

Additionally, the mortality expense is a fundamental consideration in the administration of VUL policies, and fluctuations in this expense can significantly affect both the cash value and the overall performance of the policy. Therefore, higher mortality expenses result in reduced cash values as more funds are used to cover insurance costs, rather than contributing to the growth of the policy’s cash value.