No. As a policy owner, your cash value grows tax deferred. If you need to access your cash value, you can do so tax free. And in most cases, your beneficiaries will not pay income taxes on the death benefits they receive.
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What is variable universal life insurance?
Variable universal life insurance from New York Life offers flexible investment and insurance features, all rolled into one tax-advantaged product solution.
How does a variable universal life insurance policy work?
Variable universal life insurance policies combine long-term death benefit protection with the opportunity to pursue market returns. Since these policies allow you to invest your cash value, you may be able to secure more growth than you could with whole life or other fixed rate policies. Best of all, you can use your cash value to help fund your policy so the more it grows, the lower your insurance premiums will be.
The benefits and features of variable universal life insurance
Variable life insurance is one of the most versatile products in the insurance industry. That’s because it comes with a unique and potentially valuable mix of benefits and features.
Long-term protection
With variable universal life insurance, you may be able to keep your coverage all the way to age 121.
Adjustable premiums
You can pay premiums on a set schedule or make ad hoc payments as you go (within limits). Just keep in mind that you’ll need to monitor your policy regularly to make sure your cash value is performing as expected. If not, you may need to adjust your premiums to ensure that your policy continues to meet your intended goals.
Market participation
You have access to an array of investment options, including model portfolios, managed by experienced asset managers.1 This wide selection of investment options helps give you diversification across asset classes, investment philosophies, and geography. Of course, it’s important to remember that diversification does not necessarily protect you from loss and that the policy’s investment options are subject to market risk so both gains and losses are possible.2
Cash value accumulation potential
Variable universal life policies have the potential to accumulate cash value, which is an asset you can use in a variety of ways. Since one of these options is investing your cash value, this feature is subject to market risk and cannot be guaranteed.
Tax advantages
Beneficiaries typically do not pay income taxes on the death benefits they receive. In addition, your cash value has the ability to grow tax deferred. And, if your needs change, you can usually access your cash value income tax free. 3
What are some different types of life insurance?
Whole life insurance
Whole life is permanent life insurance that offers long term protection, fixed premiums, and steady cash value growth. As a result, it can be a versatile tool to help you meet several needs. The death benefit provides cash to your beneficiaries when you pass away, plus you get potentially tax-free access to your cash value while you’re alive. This is cash that can be used to help you fund college tuition, assist in a down payment for a home, supplement retirement income, or help pay for anything else you need.3
Universal life insurance
Universal life offers a combination of long-term coverage and the ability to accumulate cash value with interest. Since the interest rate can change over time, you may need to increase—or decrease—your premium payments so that your coverage and cash value continue to meet your needs.
Variable universal life insurance
Variable universal life provides a life insurance benefit in exchange for flexible premiums and the ability to invest your cash value in stocks, bonds, or a variety of professionally managed funds. Since these investments can go up and down in value, you should expect your policy’s cash value to fluctuate over time.
Please note that mortality and expense risk charges, cost of insurance charges, per thousand face amount charges, monthly contract charges, fund fees, and any applicable surrender charges apply. A variable universal life policy is offered only by prospectus; it’s important to read the prospectus carefully before investing to learn the investment objectives, strategies, risks, charges, and expenses.
Consider variable universal life for:
- Long-term death benefit protection
- Potential for cash value accumulation
- Potential for upside growth through access to financial markets
Variable universal life insurance FAQs
Term life insurance provides temporary coverage which pays a death benefit if the covered person passes away during that time. Unlike variable universal life, it does not accumulate cash value and the premiums you pay are fixed. As a result, term life can be a straightforward and affordable way to protect your loved ones for a specific period of time.
Variable universal life insurance offers a flexible and comprehensive approach to life insurance coverage, but it does not guarantee the amount of your death benefit. The death benefit can fluctuate based on the performance of the underlying investment options you select. If you would like more stability, you can invest in a fixed-dollar account or add riders and provisions that “lock in” certain benefits. Discussing these options with a New York Life financial professional can help you select a plan that protects your family's future and allows you to meet other financial goals as well.
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Want to learn more about variable universal life insurance?
A New York Life financial professional can help determine what’s right for you.
1Your choice of investment options may be limited if you elect certain benefits or riders.
2"Form of Initial Summary Prospectus," New York Life Insurance and Annuity Corporation, May 1, 2021. Sec.gov
3Accessing the cash value will reduce the available cash surrender value and death benefit.
Variable universal life insurance (VUL) is a type of permanent insurance that provides a life insurance benefit in exchange for flexible premiums. The policy’s cash value, including any assets allocated to the investment options, is subject to market risks and fluctuates in value. If there are any decreases in the policy’s cash value, they could negatively impact the policy’s life insurance benefit. Ask your registered representative for a VUL policy and underlying funds’ prospectuses. Please consider the investment objectives, risks, charges, and expenses of the policy carefully before investing. The prospectuses contain this and other information.