Why would a Variable Universal Life policy fail?
The vast majority of policyholders put their premium dollars in sub-accounts invested in stocks, usually at the suggestion of the agent. These sub-accounts are volatile, and when cash value drops because of downward movement in the stock market, the policyholder must add money in order to keep the policy in effect. Premiums which the owner thought had vanished forever might suddenly reappear. And premiums the owner had been paying will increase, sometimes to a shocking degree. The policy can become so expensive that the policyholder simply can’t afford to make the premium payments any longer. To compound the hardship of lost fees and expenses that can’t be recouped, the policyholder may have been persuaded by the agent to surrender or borrow against other insurance policies in order to fund the variable universal life policy. Now those original policies will have been lost as well. You might think that these problems can be avoided by choosing safe fixed-income sub-accounts that have a
