Variable Universal Life/Universal Life Plan (VUL/ULP) 2025 – 400 Free Practice Questions to Pass the Exam

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What is a potential disadvantage of a VUL policy?

The lack of death benefits

The potential for cash value to decrease

A potential disadvantage of a Variable Universal Life (VUL) policy is the potential for cash value to decrease. This is because VUL policies have investment components that are linked to various investment options, such as stocks and mutual funds. The cash value of the policy can fluctuate based on the performance of these investments, which means there is a risk of a decline in cash value if the chosen investments perform poorly. This variability can make it challenging for policyholders to predict their cash value growth, particularly in unstable market conditions.

The presence of investment risk inherent in a VUL policy sets it apart from more traditional life insurance products, which may offer more stability in cash value accumulation. This potential for loss can be a significant consideration for individuals evaluating their overall financial and insurance needs.

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The guaranteed fixed interest rates

The simplicity of the policy terms

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