Better than an IUL – Is a VUL?

IUL vs VUL which is better, is base on knowing both, so you can clearly decide for yourself.

In today’s life insurance marketplace, consumers and even seasoned professionals are often presented with Indexed Universal Life (IUL) or Whole Life as the default solutions for long-term accumulation and death-benefit planning. But a critical question is rarely asked:

Better than a IUL – is a VUL?

For many cases we review at LifeInsuranceReview.com (LIR), the answer is yes—and the reason has to do with product structuring, flexibility, and features not available to whole life and index universal life (IUL). And yes, it also to do with additional licensing, regulation, and more transparency.

This article is written for both consumers and financial professionals who want a deeper, more objective understanding of why Variable Universal Life (VUL) deserves to be part of every serious comparison—and why failing to review it may leave clients shortchanged.

The Licensing Reality Most Consumers Never Hear

One of the most important—and least disclosed—facts in the life insurance industry is this:

Most licensed life insurance sales agents and brokers are NOT FINRA/securities-registered and therefore cannot offer Variable Life or VUL products.

To sell Variable Life or VUL, an agent/broker must:

• Hold a life insurance license and

• Pass at a minimum two additional securities exams (typically Series 6 and Series 63)

• Be supervised by a FINRA-regulated broker-dealer

This subjects the agent/broker to oversight by Financial Industry Regulatory Authority, including suitability reviews, advertising compliance, disclosures, and ongoing supervision.

By contrast, IUL and Whole Life are fixed insurance products, regulated only at the state level, with far fewer disclosure and oversight requirements.

How the 2007–2009 Financial Crisis Changed Everything

Before the financial crisis, Variable Life and VUL were extremely popular. Why?

• Long-term returns were historically higher

• Investment options were transparent

• Policy performance was easier to stress-test

After the 2007–2009 crisis:

• Market volatility scared consumers

• IUL surged in popularity due to its “zero downside” marketing

• Insurance carriers discovered they could:

  1. Earn higher profit margins

  2. Recruit more agents with less licensing needs, training and supervision

  3. Avoid FINRA oversight entirely

  4. Offer sales incentives that do not need public disclosure

This marked a major turning point in the life insurance sales industry.

Why IUL Became the Industry’s Favorite Product

IUL checked every box for rapid sales expansion:

• High commissions

• Simple licensing

• Compelling marketing narratives

• Minimal regulatory scrutiny

• No securities exams required

Because IUL is considered a “fixed” product:

• Insurance companies can offer luxury trips, bonuses, prizes, and marketing incentives

• These incentives do not have to be disclosed to clients

• Recruiting agents into network-marketing structures became much easier

However, this convenience for the industry came at a cost to consumers.

Why VUL Is Harder—but Often Better

Now let’s return to the core question:

Better than a IUL – is a VUL?

For many accumulation-focused cases, yes—when designed properly.

Modern VULs Have Evolved Significantly

Over the last five years, VUL products have:

• Improved cost structures

• Expanded investment flexibility

• Increased transparency

• Enhanced downside-risk management options

A well-structured VUL can offer:

• 100% of the protection benefits of IUL or Whole Life

• Full market participation

• True investment choice

• Daily transparency

• Regulatory safeguards under FINRA

The Red Flags Consumers and Professionals Must Watch For

If you are being sold an IUL or Whole Life for accumulation, pay attention to these warning signs:

1. Your agent/broker cannot offer VUL

2. Your agent/broker discourage to review any VUL option

3. No comparison illustrations were provided

4. Only “fixed” products are discussed

5. Upside is emphasized without long-term stress testing

6. No explanation of regulatory differences

If an agent/broker is not licensed to offer VUL, it means:

• They are not subject to FINRA oversight

• They are not presenting all viable options

• They don't understand the available VUL options that might benefit your circumstances better

• There may be strong financial incentives to push fixed products only

What We See at LifeInsuranceReview.com (LIR)

At LIR, we are Licensed Life Insurance Analysts—a credential most consumers and professionals don’t even know exists.

We are:

• Independent

• Fee-based

• Product-agnostic

• Fiduciaries when acting as analysts

In more than half of the cases we review, a properly structured VUL was objectively superior to the IUL that was sold—or being proposed.

Most of these cases could have been avoided if the client had received an independent second opinion before the policy was placed.

The Importance of the 10–30 Day Free Look Period

Every state requires a 10–30 day Free Look Period, allowing consumers to:

• Review the policy

• Modify coverage

• Cancel without surrender charges

An increasing number of LIR cases arrive within this free look window, where:

• Policy issues can still be corrected

• Alternatives (including VUL) can still be evaluated

• Long-term financial damage can still be prevented

Why Professional Referrals Matter

Our success comes from CPAs, attorneys, advisors, and fiduciaries who refer their clients for a neutral second opinion.

When professionals collaborate with LifeInsuranceReview.com (LIR):

• Clients gain clarity

• Conflicts of interest are reduced

• Product decisions are better documented

• Liability risks are lowered

Final Thought: Choice Requires Access

The real issue isn’t whether IUL or VUL is “better” in theory.

The issue is this:

You cannot make a best-interest decision if entire product categories are never shown.

If you’re being sold—or have already purchased—an IUL or Whole Life policy for accumulation, you owe it to yourself or your client to review VUL as well.

Frequently Asked Questions (FAQs)

1. Is VUL riskier than IUL?

VUL involves market risk, but it also offers full transparency and control. Risk can be managed through allocation, funding design, and policy structure.

2. Why don’t most agents offer VUL?

Because it requires securities licensing/exams, additional educations, more continuing education, and FINRA supervision.

3. Are IUL returns guaranteed?

No. IUL returns are capped, rates can change negatively each year, and there many non-guaranteed elements that impact the policy performance other than originally illustrated/.

4. Can I compare VUL during the free look period?

Yes. The 10–30 day free look period is the best time to obtain independent comparisons.

5. What does a Licensed Life Insurance Analyst do?

They provide independent, fee-based policy reviews across life, annuity, disability, and long-term care products—separate from sales incentives. Licensed Life Insurance Analyst are true hired fiduciaries.

If you or your clients want clarity, transparency, and real choice—start with an independent review.

Better than a IUL – is a VUL?In many cases, the answer only becomes clear after a proper second opinion.