A hallmark of variable universal life insurance (VUL) is flexibility. In addition to death benefit protection, VUL offers the ability to allocate among purely market-driven and fixed options with guaranteed minimum interest crediting. With such a wide range of investment options, you may adjust your policy’s allocations to meet a potential lifetime of growth objectives and risk tolerances—all in one flexible policy.
A financial professional must be a properly licensed and appointed life insurance producer to sell life insurance products.
*For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may be partially or wholly taxable. Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Sec. 101(a)(2)(i.e. the transfer-for-value rule); arrangements that lack an insurable interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Sec. 101(j).
Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.
You should carefully consider a variable life insurance product’s risks, charges, limitations, and expenses, as well as the risks, charges, expenses and investment goals/objectives of the underlying investment options. This and other information about Pacific Life Insurance Company products are provided in the applicable product and underlying fund prospectuses which are available from your life insurance producer or by clicking here. Read them carefully before investing or sending money.
Pacific Life Insurance Company reserves the right to change or modify any non-guaranteed or current elements. The right to modify these elements is not limited to a specific time or reason.
Life insurance is subject to underwriting and approval of the application and will incur monthly policy charges.
Pacific Life Insurance Company is licensed to issue insurance products in all states except New York. Product/material availability and features may vary by state. Insurance products and their guarantees, including optional benefits and any crediting rates, are backed by the financial strength and claims-paying ability of the issuing insurance company but they do not protect the value of the variable investment options. Look to the strength of the life insurance company with regard to such guarantees as these guarantees are not backed by the broker-dealer, insurance agency, or their affiliates from which products are purchased. Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the life insurance company. Variable insurance products are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company and are available through licensed third-party broker-dealers.
Pacific Life Insurance Company's Home Office is located in Newport Beach, CA.
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Permanent Coverage
Variable life insurance is a permanent life insurance product, like whole life insurance or universal life insurance. It covers the policyholder and provides a death benefit at any time during the course of the policyholder’s life – no matter the age of the policyholder. (This is different from term life insurance, which only covers a specific timeframe in the policyholder’s life – usually 10, 20 or 30 years.)
People buy variable life insurance to have the peace of mind of knowing that their life insurance coverage will always be with them – no matter how long they live. Term life insurance protects against the risk of dying young – variable life insurance (and other permanent life insurance) offers death benefits at any stage of life – including the possibility of living a long life.
Pays a Death Benefit
Variable life insurance pays a death benefit to the beneficiaries assigned by the policyholder – spouse, family, children or other loved ones. Life insurance policies can also be assigned to benefit the policyholder’s estate itself or a charitable organization – this is one reason that permanent life insurance policies are valuable for estate planning.
Guaranteed Death Benefit
Variable life insurance policies offer greater risk in terms of their investment characteristics (see below), but one place where there is no risk to the policyholder is in the death benefit, which is a fixed amount. No matter what happens with the stock market, a variable life insurance policy will continue to provide a guaranteed death benefit for as long as the policyholder lives.
Fixed Premiums
Variable life insurance policies are set up with fixed premiums and a steady payment schedule. This creates a discipline and “forced savings” effect that helps the policyholder save (in the cash value/investment component of the policy) while also making the regular insurance premium payments.
Variable life insurance policyholders can also benefit from knowing that their premium payments will never increase and that they can continue making their payments on a consistent and reliable schedule. Like whole life insurance, as long as premium payments are made, the policy remains in effect.
One exception to this is variable universal life insurance – this is a variation on a standard variable life insurance policy that contains elements of a universal life insurance policy. With a variable universal life insurance policy, the policyholder has the flexibility to choose payment arrangements, vary the amount or timing of premium payments, and generally exercise more freedom over how to manage the cash value and premium obligations of the insurance policy.
More Investment Options
The biggest difference between variable life insurance and other forms of permanent life insurance is that variable life insurance offers a much wider array of investment options for the cash value portion of the policy.
With whole life insurance and universal life insurance, the cash value component of the policy is guaranteed – which means that it is guaranteed not be exposed to any risk, and therefore not to grow. With a whole life insurance or universal life insurance policy, the cash value will always be there, and it will grow over time, but only at low rates of interest.
For people who are not satisfied with such a slow-growing investment, variable life insurance offers a more diverse selection of stock and bond funds to invest in. Similar to a mutual fund, with variable life insurance the policyholder can choose where to invest the cash value of the policy.
Investment options vary according to the offerings of each individual insurance company – each company has a variety of funds that it makes available to variable life insurance policyholders. Since every investment has an element of risk, variable life insurance policyholders should consider their risk tolerance, their overall financial goals and the overall contents of their investment portfolio before deciding where to invest their variable life insurance cash value.
More Risk, More Growth Potential
Variable life insurance has an added element of investment risk, and this risk is not for everyone. People who want the reassurance of the guaranteed cash value offered by whole life insurance, or the fixed interest rates of universal life insurance, should probably not consider buying a variable life insurance policy.
The ideal candidate for a variable life insurance policy is a more sophisticated investor who has a higher tolerance for risk and a higher appetite for growth. Instead of watching their cash value languish for years in low-interest accounts, these policyholders want to put that money to work.
Just like any investment, variable life insurance investments have the potential to go up or down depending on market conditions. There is definitely an added risk to buying variable life insurance – the cash value is not guaranteed, and may even lose value over time.
But for people who want to use their life insurance policy as a true “investment” and not just a low-yield cash savings fund, variable life insurance could be valuable by providing financial protection in case of death, while also helping them reach their long-term financial goals.