What distinguishes variable universal life insurance from other types?

Variable universal life insurance is distinct from other types of life insurance primarily due to the policyholder's ability to choose the investments within the policy. This flexibility allows the policyholder to allocate the cash value among a variety of investment options, which can include stocks, bonds, and mutual funds. This means that the cash value and potentially the death benefit can vary based on the performance of these investments.

In contrast, other insurance products may have fixed components regarding premiums, cash value, or investment control. For instance, whole life insurance typically offers guaranteed cash value growth, fixed premiums, and a more rigid investment structure that does not allow for policyholder investment choices. Similarly, term policies provide coverage for a specified period but do not accumulate cash value or allow for investment selection.

The unique feature of investment choice in variable universal life insurance aligns with the broader trend toward personalized financial products, enabling individuals to potentially increase their returns based on market performance while still providing life insurance coverage.