Question 1 of 18
Explain how variable universal life combines universal-life mechanics with variable insurance, and identify the main policyowner risk.
Strong Interview Answer
Variable universal life combines flexible-premium universal-life mechanics with separate-account investment choices. The policyowner bears investment risk because account values can rise or fall with the selected subaccounts, and poor investment performance or insufficient funding can threaten policy values and even cause lapse if charges cannot be supported.
What to Listen For
- flexible premium mechanics
- separate-account investment choices
- policyowner bears investment risk
- underfunding or poor performance can threaten policy values
Caution
A strong answer must distinguish VUL from both fixed universal life and variable whole life; simply saying 'it invests in the market' is incomplete.