Variable Life Insurance vs. Variable Universal Life Insurance: What’s the Difference & Which One Should You Get?

Variable life insurance and variable universal life insurance are two types of permanent life insurance. The biggest difference between variable life (VLI) and variable universal life (VUL) is the VUL account has a flexible death benefit while variable life has a guaranteed death benefit. The cash value of a VLI policy can also grow faster and larger than with a variable universal life policy.

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Last Updated: 11/8/2022
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When comparing universal vs. variable life insurance, the main differences are the death benefit and cash value. Universal variable life offers a flexible death benefit but slower cash value growth, while variable life has a guaranteed death benefit and a greater potential for cash value growth.

Although both life insurance policy types have their uses, and you may be debating between variable life and universal life, both are best for high-income earners with at least some investment knowledge or access to a professional investment manager. They are usually not the most economical choice for many life insurance shoppers.

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What Is the Difference Between Variable & Variable Universal Life Insurance?

The difference between variable life and variable universal life insurance is the death benefit options and cash value growth potential. A VUL account gives you the option to increase or decrease the death benefit, while variable life provides the option to increase the premium or cash value of the death benefit. The VUL account can have greater cash value growth but can experience market losses, which may reduce the death benefit.

Variable vs. Variable Universal Life Insurance

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Variable Life Insurance
  • Has a guaranteed minimum death benefit
  • Can add cash value or premiums paid to increase the death benefit
  • Market losses can lower the death benefit
  • Investments can accelerate cash value growth
  • Can have higher management fees
  • Has fixed premium payments
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Variable Universal Life Insurance
  • No guaranteed death benefit
  • Can lower or raise death benefit as life needs change
  • Cash value growth is slower and not guaranteed
  • May have more manageable fees
  • Has adjustable premium payments

Although the names are almost identical and they are both types of permanent life insurance, variable life and VUL insurance are not the same policy. Also, variable life insurance or variable whole life insurance is not a universal life policy — universal life has a guaranteed death benefit, but you can adjust the death benefit and premium payments. While it has greater cash value accumulation potential, it can also lose cash value and lower the death benefit.

Features of Variable Life Insurance vs. Variable Universal Life Insurance
  • Feature
    Variable Life Insurance
    Variable Universal Life Insurance
  • Length of
    Coverage

    As a permanent life insurance
    policy, a variable life insurance
    policy is designed to last your
    lifetime, as long as premiums are
    paid.

    VUL is a permanent life insurance policy
    with continuous premium payments
    required to maintain the death benefit.
    Changes to the death benefit can affect
    premiums owed.

  • Cash Value

    This life policy has high earning
    potential but can also lose cash
    value depending on market
    fluctuations in the sub-accounts.
    Cash value grows tax-deferred, but
    removing cash can trigger a taxable
    event.

    This variable life insurance policy
    provides the opportunity to choose your
    investments, which will affect how fast
    your cash value grows. The cash value
    growth is tax-deferred until removed,
    which could trigger a taxable event.

  • Death
    Benefit

    The death benefit has a guaranteed
    minimum amount determined at the
    start of the policy, which is safe from
    market fluctuations. You can also
    choose a face-value death benefit
    option, which is the face value
    amount plus cash value or face
    value amount plus premiums paid.
    Choosing the latter two may result
    in a higher premium for the life of
    the policy.

    The death benefit usually does not have
    a guaranteed minimum; it is flexible
    throughout the life of the policy. As life
    situations change insurance coverage
    needs, you can increase or decrease the
    death benefit, which will likely affect the
    premium amount owed. The policy does
    not have the option to include the cash
    value or paid premiums in the death
    benefit.

  • Premium
    Payments

    Premium payments are fixed from
    the start of the policy. Failure to
    make the agreed-upon premium
    payments could cause the policy to
    lapse.

    Premium payments are flexible and can
    be adjusted, even when the death
    benefit is not. This policy has a high
    chance of lapsing when lowering the
    premium payments unless the cash
    account has enough value to offset the
    lower premium.

  • Dividend
    Eligibility

    Although this is a permanent policy,
    it is not eligible for dividends, even
    when placed with a mutual
    insurance company that participates
    in dividend disbursement.

    This policy is not eligible for dividends,
    even when issued by a participating
    mutual insurance company.

  • Rider
    Eligibility

    This policy is eligible for riders, such
    as the accelerated death benefit
    rider, but rider availability can vary
    by carrier and policy plan details.
    Adding riders will likely increase the
    premium amount.

    This policy is eligible for riders, which
    can vary by carrier and policy plan
    details. For example, you may want a
    rider to cover disability, which requires
    finding a company that offers it with
    VUL. You should expect to pay more
    when including a rider.

  • Use for
    Estate
    Planning

    Out of the two variable life
    insurance policies, this policy is
    more ideal for estate planning, as it
    has a guaranteed minimum death
    benefit your beneficiary can depend
    on.

    This policy is not ideal for estate
    planning
    as it does not have a
    guaranteed death benefit. Any death
    benefit or premium changes could cause
    the policy to lapse, which would remove
    its role in estate planning.

Should You Get Variable or Variable Universal Life Insurance?

Are you wondering whether you should get variable life insurance or variable universal life insurance? Both policies are best for investment-savvy, high-income earners with a healthy risk tolerance. Variable life is a great choice if you want a guaranteed minimum death benefit and predictable life insurance premium rates. Variable universal life is ideal for those who want more investment control and the ability to change the premium or death benefit.

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    Variable life insurance is best for:

    • High-income earners with maximized savings options
    • People who want death benefit options
    • Someone wanting greater cash value growth potential
    • People who are okay with market fluctuations that can negatively affect the death benefit and cash value
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    Variable universal life insurance is best for:

    • High-income earners who have already maxed out other savings options
    • People who want to choose and closely monitor market conditions
    • Someone who wants a flexible premium and death benefit
    • People who understand how death benefit and premium changes can cause the policy to lapse

Both variable life insurance and variable universal life are best for high-income earners with a deep knowledge of the market and its volatility or an advisor that can manage the account for them. For the vast majority of insurance shoppers, we recommend term life insurance because it's the cheapest option, and then investing the premium savings separately. Consider these term life insurance companies when researching your coverage options.

If you still believe permanent life insurance is your best option, you should look at our rankings of the top companies for whole life insurance and universal life insurance to help you make your decision.

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Frequently Asked Questions

We hope this article helps you when considering universal vs. variable life insurance. Here are answers to some of the most common questions about variable life insurance and variable universal life insurance.

About the Author


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Mandy Sleight is a professional freelance writer and licensed insurance agent. She has her property, casualty, life, and health licenses and has been working in the industry since 2005. Mandy has worked for well-known insurance companies like State Farm and Nationwide Insurance, and most recently as the Operations Coordinator for a start-up employee benefits company.

Mandy earned her Bachelor of Science degree in Business Administration and Management from the University of Baltimore and her Master in Business Administration from Southern New Hampshire University. She uses her vast knowledge of the insurance industry and personal finance combined with her writing background to create easy-to-understand and engaging content to help readers make smarter choices with their budget and finances.