What is a common reason people might choose a VUL policy over a traditional life insurance policy?

Choosing a Variable Universal Life (VUL) policy often stems from the desire for higher potential investment returns, which is a critical feature of these products. A VUL policy not only provides a death benefit but also incorporates an investment component, allowing policyholders to allocate a portion of their premiums into various sub-accounts that can include stocks, bonds, and other investment vehicles. This investment flexibility can lead to higher returns compared to traditional life insurance policies, which typically do not offer an investment component or restrict policyholders to fixed interest accounts.

This potential for increased returns appeals to individuals who are comfortable managing their investments and are looking for a way to mix life insurance with investment opportunities. They might be motivated by the possibility of growing cash value at a rate that exceeds what a whole life policy would offer. As a result, selecting a VUL policy can align with individuals’ financial goals, especially if they seek the dual benefits of life insurance protection and the chance to build wealth over time through market participation.