What aspect primarily distinguishes variable universal life insurance from other types of policies?

Variable universal life insurance is primarily distinguished by the investment risk taken by the policyholder. This type of policy combines features of both universal life insurance and investment products, allowing the policyholder to allocate a portion of the premiums towards a variety of investment options, such as stocks and bonds. As a result, the cash value and potentially the death benefit of the policy can fluctuate based on the performance of these investments.

In contrast to traditional whole life or universal life policies, where the insurer assumes the investment risk and the growth is typically guaranteed or stable, variable universal life places that risk onto the policyholder. This means that while there is the potential for higher returns, there is also the risk of lower returns or even losses, depending on market performance. This characteristic is a fundamental element of variable universal life insurance and is what sets it apart from other types of life insurance policies.

The ability to borrow against the policy is a feature shared by many life insurance products. While variable universal life does allow this, it is not unique to it. A higher death benefit can vary depending on the specifics of the policy and is not a defining characteristic of variable universal life. Finally, fixed premium payment options pertain to other forms of life insurance, such as whole life,