What kind of investment strategy requires considerable investment experience?

Variable universal life insurance is an investment strategy that combines life insurance with investment components, allowing policyholders to allocate a portion of their premiums to a variety of investment options such as stocks, bonds, or mutual funds. This product gives policyholders significant control over their investment choices and the potential for higher returns compared to traditional whole life insurance.

However, with this control comes the requirement for a higher level of investment experience and knowledge. Policyholders must understand market risks, asset allocation, and how to manage their investments effectively to maximize growth while ensuring sufficient coverage. This complexity and the involvement of investment management distinguish variable universal life insurance from other products that either provide guaranteed returns or do not involve a significant investment component.

In contrast, fixed life insurance, interest-sensitive whole life insurance, and flexible premium variable annuities involve less direct investment management from the policyholder, which makes them more suitable for individuals with varying levels of investment experience. While they may have some investment components, they typically provide more guarantees and less volatility than variable universal life insurance.