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Which combination BEST describes a Variable Universal Life (VUL) policy compared with traditional Variable Life (VL)?
AVUL: fixed scheduled premium, general account investment, with a guaranteed minimum death benefit — and not registered as a security
VUL: flexible premium, separate account subaccounts, NO guaranteed minimum death benefit on lapse — registered as a security
CVUL: flexible premium, general account investment only, with a guaranteed cash value floor backed by the insurer
DVUL: single-premium funding only, separate account subaccounts, with both cash value and death benefit guaranteed
Why this is the answer
Variable Universal Life takes the universal life chassis — flexible premiums, adjustable face amount, transparent monthly cost-of-insurance and expense deductions — and replaces the fixed-interest cash account with separate-account subaccounts the owner directs. Because there is no required scheduled premium and the insurer is not on the hook for a guaranteed minimum death benefit beyond what cash value supports, VUL can lapse if subaccount returns plus deposits do not cover monthly deductions. VUL is dual-regulated as life insurance AND a security under the Securities Act of 1933.
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