SECTION IV: INVESTMENTS

Advantages/Disadvantages

Variable Universal Life Insurance offers some distinct advantages, including the opportunity for cash value growth in its underlying variable sub accounts, while not being taxed on earnings until the policy is surrendered. Also, investors have the opportunity to select how their money is being invested, giving them more control. Using certain guidelines, investors have the flexibility to decide on the timing and amount of premium payments and they may apply the interest earned on their selected investments toward premiums, potentially lowering the amount the investor must pay.

In addition, an investor can decide whether to increase of decrease the face amount of the policy. Perhaps the main disadvantage of the VUL is investment risk. If the selected investments perform poorly, the policy may either lapse or the investor might have to pay higher premiums; therefore, investors should pay close attention to the selection of investments within the VUL and monitor their performance closely.

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