Why Whole Life Insurance Beats Variable Universal Life (For Most People)

Whole life vs universal life – parents laying with baby

With so many options out there for life insurance, it can be tough to decide which one is best for you and your family. Whole life and variable universal life are popular types of permanent life insurance, both offering long-term financial protection. But what’s the difference?


Variable Universal Life vs. Whole Life

It’s helpful to understand what whole life insurance is before diving into variable universal life, which is a more complex type of policy.

Whole life insurance is a policy that provides permanent, lifelong coverage for your family as long as premiums are paid. Coverage doesn’t end after a certain length of time.  

It also builds cash value. This accumulates with each premium payment that is paid over the life of the policy. You can use cash value in a number of ways, which is an added benefit. One way is to borrow from it to pay for an immediate financial need.* Or if you surrender the policy, you can receive the accumulated cash value. There’s also the option to use the cash value to make premium payments for a certain amount of time – in case your cash flow is impacted.

Variable universal life insurance policies also offer cash value, but the way it’s accumulated is different.


* Policy loan interest rate is 8%. Loans may impact cash value and death benefit.

"Cash value works differently with a variable universal life policy."


How Variable Universal Life Insurance Works

Cash value works differently within a variable universal life policy.1 With this type of policy, you can choose how your cash value is invested. This gives you the chance to earn higher returns on your cash value, but it also puts you at greater risk. If your investments perform poorly, your cash value will suffer, and you may have to pay higher premiums to keep your policy active.

Another way this type of policy differs from whole life is that both the premium and interest rate are variable, not fixed. You have some flexibility to change your premium amount and payment date even once your policy is active.

"For most people, whole life insurance makes more sense."


How to Decide Which Is Right for You

When deciding whether whole or variable universal life is right for you, you should consider if you want the security of a fixed premium and knowing that it will not increase OR if you’re comfortable with the possibility of your premium increasing for the chance to obtain more cash value.

If you’re not comfortable with the idea of potentially paying more in premiums because of an interest rate shift, then getting whole life insurance is the safe play. If, on the other hand, you’re willing to take a chance at better returns with your cash value account, you may want to consider a variable universal life policy.

For many, whole life insurance makes more sense. It provides a guaranteed, fixed premium which could make it easier to continue to pay for and keep their life insurance policy for their whole life. 


Getting Whole Life Through Gerber Life

Gerber Life understands the importance of giving your family a safety net — one you can always count on to be there for them. That’s why we make getting a Whole Life Insurance policy easy, starting with your free quote and followed by a quick application. You can apply anytime, all the way up to age 70. But the sooner you apply, the lower your rate will be.


Learn more about Gerber Life Whole Life Insurance here or call us at 1-800-704-2180.


1Kagan, Julia, “Variable Universal Life Insurance (VUL)”, Investopedia,  https://www.investopedia.com/terms/v/variableuniversallife.asp

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