What is the feature of variable universal life insurance regarding guaranteed interest rates?

Variable universal life insurance is designed to provide flexibility in premium payments and death benefits, along with the option to invest the cash value in a variety of investment options. However, one of the key characteristics of this type of insurance is that it does not offer guaranteed interest rates. The cash value growth is tied to the performance of the investment options chosen by the policyholder, which means the interest can fluctuate based on market conditions.

This flexibility is a significant differentiation from whole life policies, which typically provide a guaranteed minimum interest rate on the cash value. Additionally, while variable universal life may have a minimum death benefit, it relies on market performance for cash value growth, making the interest component variable rather than guaranteed. Hence, the absence of guaranteed interest rates is a fundamental attribute of variable universal life insurance, emphasizing the investment aspect and associated risks taken by the policyholder.