Final answer:
The main difference in premiums lies in the flexibility: VUL policies offer adjustable premiums and the option to use accrued cash value to pay them, whereas Variable Whole Life policies have fixed, stable premiums that do not change over time.
Step-by-step explanation:
Differences in Premiums between Variable Universal Life and Variable Whole Life Policies
Variable Universal Life (VUL) policies and Variable Whole Life policies are both types of cash-value (whole) life insurance policies that provide a death benefit to beneficiaries along with a cash value account that can grow over time. However, the way premiums vary is a key difference between these two types of policies.
VUL policies provide policyholders with the flexibility to adjust premiums and death benefits. Premiums can vary from month to month as long as enough money is paid to keep the policy active, and the policyholder can use the cash value to pay premiums if needed. This flexibility is afforded by the policy's design, which allows policyholders to choose how to allocate their cash value among various investment options, resulting in a fluctuating cash value.
In contrast, Variable Whole Life policies typically have fixed premiums that do not change over the life of the policy. The cash value in Variable Whole Life policies is also tied to investment performance, but the premiums remain consistent, offering a more stable and predictable payment schedule. Ultimately, the choice between VUL and Variable Whole Life policies depends on the policyholder's financial goals, risk tolerance, and need for premium flexibility.