Why Variable Universal Life (VUL) Is Becoming the New “Core Holding” for America’s Wealthiest Families

VUL’s Rise from Niche Product to Core Planning Platform

Variable universal life (VUL) has evolved from a specialist insurance product into a central building block of sophisticated U.S. wealth strategies, especially among high-net-worth and ultra-high-net-worth families. At its core, VUL is a permanent, investment-linked life insurance policy that combines market-exposed cash value with flexible premiums and a customizable death benefit inside a tax-advantaged wrapper.​

What is changing now is not the basic chassis, but how wealthy families and their advisers are using it. VUL is increasingly treated as a planning platform: a way to consolidate protection, investment growth, tax optimization, liquidity, and cross-border succession in a single, controllable structure. In a regime of higher tax scrutiny, volatile markets, and globally mobile heirs, that combination is gaining strategic weight in boardrooms and family offices alike.​

Funding with Existing Portfolios: Turning Assets into Leverage

Unlike traditional policies that must be funded strictly with fresh cash, many VUL structures now allow clients to contribute existing investment portfolios as premium, effectively “wrapping” current assets inside the policy. Once transferred, those holdings support a death benefit that can be a multiple—two, three, even four times—of the contributed portfolio value, depending on underwriting, age, and product design.​

For wealthy families, this means dormant or long-held assets can be transformed into immediate, institutionally sized protection without liquidating favored positions. Concentrated equity blocks, legacy fund interests, or long-term fixed income portfolios can be repositioned into a structure that simultaneously delivers market participation, leverage through the death benefit, and tax-advantaged treatment.​

Investment Autonomy: Keep Your Custodian, Keep Your Strategy

A critical appeal of modern VUL for sophisticated investors is that it need not displace existing advisory relationships. Many structures allow families to maintain their preferred private banks, external asset managers, or multi-family offices as the de facto investment managers of the underlying separate accounts. This approach preserves continuity of investment strategy while layering protection and tax benefits on top.​

Within regulatory constraints, VUL offers the ability to adjust allocations, change custodians, and refine investment policies over time, subject to diversification and investor-control rules that protect the policy’s tax status. For seasoned investors with strong views on asset allocation, risk budgets, and alternative investments, this autonomy differentiates VUL from more rigid, pre-packaged insurance products.​

Structural Benefits: Protection, Liquidity, and Tax Efficiency

From a structural standpoint, VUL provides three interconnected benefits that wealthy families increasingly prize:

1. A death benefit that is generally income-tax-free to beneficiaries under U.S. rules, though estate inclusion must be managed through ownership and trust planning.​
2. Tax-deferred accumulation of cash value, allowing investment returns to compound without annual income tax drag, similar to other tax-advantaged vehicles but without many contribution caps.​
3. Access to the policy’s value via loans and withdrawals that can often be structured for tax-efficient supplemental liquidity.​

This mix positions VUL as a multi-purpose liquidity and legacy engine. Death benefits can be calibrated to fund estate taxes, equalize inheritances, backstop charitable commitments, or support buy–sell arrangements in closely held businesses. At the same time, the policy’s cash value provides an additional pool of capital that can be tapped under defined rules, without early-withdrawal penalties that characterize many retirement plans.​

Cross-Border Succession: Managing Jurisdictions, Heirs, and Timing

Wealth today is inherently cross-border: heirs may live in New York, London, Singapore, Dubai, or Zurich, each with different tax and inheritance rules. VUL can be structured so that beneficiaries not only receive an income-tax-free death benefit (subject to local law) but also have optionality around the form and timing of payout. Proceeds may be distributed in cash or retained in investment form under the policy structure or a successor vehicle, depending on design.​

That flexibility becomes powerful when navigating forced-heirship regimes, competing tax claims, and complex family dynamics. Properly coordinated with trusts and cross-border legal advice, VUL can serve as a neutral pool of liquidity that simplifies estate execution, avoids distressed asset sales, and supports orderly transfers across multiple jurisdictions.​

A Product Aligned with Next-Generation Preferences

Today’s buyers are not only first-generation founders but also second- and third-generation inheritors who are more investment-savvy and more global in their outlook. They expect access to modern asset classes, ESG-aligned mandates, alternatives, and digital reporting—features that sit more naturally inside a flexible, investment-linked chassis than inside traditional guaranteed policies.​

VUL’s adaptability allows the structure to evolve as investment philosophies change. Subaccount allocations can migrate over time from growth-oriented equities to income or capital-preservation strategies as families age, sell businesses, or enter distribution phases. For family offices used to dynamic asset allocation, treating VUL as a “living” vehicle rather than a static contract is intuitively appealing.​

Market Momentum: Data Behind the Strategic Shift

Industry data confirms that VUL is no longer a niche corner of the life insurance market. In recent years, VUL premiums in the U.S. have posted double-digit growth, including a roughly 56% surge in one recent quarter and about 27% annual growth, outpacing many other product lines. Broader variable life and investment-linked products globally are projected to expand from tens of billions in annual premiums today to materially higher levels over the next decade, supported by a compound annual growth rate in the high single digits.​

Universal life products—particularly indexed UL and VUL—now account for a substantial and rising share of new U.S. life insurance business, reflecting adviser and client preference for flexibility and tax-advantaged accumulation. Regulatory shifts, such as changes to U.S. Internal Revenue Code definitions of life insurance, have also nudged product development toward accumulation-focused VUL designs aimed squarely at retirement and estate-transfer markets.​

Governance, Costs, and Risk: What C-Suites Must Weigh

For all its advantages, VUL is not frictionless. Administrative and distribution costs can be significant, reflecting both complexity and compensation structures. Policy performance is directly tied to market outcomes, meaning cash value and even death benefit levels (for certain designs) may fluctuate with investment performance.​

For corporate leaders, family offices, and investment committees, prudent VUL adoption typically includes:

• Careful fee and commission analysis versus expected tax and planning benefits.​
• Governance around investment policy, manager selection, and risk controls within the policy’s accounts.​
• Coordination with legal, tax, and estate-planning advisers to ensure ownership, trust design, and beneficiary designations align with long-term objectives and regulatory regimes.​

Handled with institutional discipline, VUL can function less as a retail insurance product and more as an integrated capital markets and legacy-planning instrument.​

Why VUL Is Becoming a Cornerstone in the U.S. Wealth Toolkit

For America’s wealthiest families, the appeal of VUL lies in its ability to compress multiple strategic objectives into one scalable structure: protection, tax-efficient growth, liquidity, and cross-border succession. It allows existing portfolios to be “up-levered” into meaningful death benefits while retaining investment autonomy and global optionality on payout.​

In a world where capital is mobile, heirs are dispersed, and tax regimes are tightening, VUL is moving from the margins of wealth planning to the core. For CEOs, founders, family offices, and policymakers watching the evolution of America’s wealth infrastructure, understanding VUL is no longer optional—it is table stakes for serious, long-horizon planning.

Variable universal life (VUL) and high-net-worth planning

1. Inside the VUL Boom: How Elite Investors Turn Existing Portfolios into Tax-Advantaged Protection.
   Discover why variable universal life (VUL) is emerging as a cornerstone of U.S. wealth structuring, blending investment autonomy, tax efficiency, and cross-border legacy planning for HNW and UHNW families.
2. The Next-Gen Wealth Shield: Why HNW Families Are Pivoting to Variable Universal Life.
   As variable universal life premiums surge and market demand for investment-linked insurance accelerates, America’s wealthiest investors are repositioning VUL as a core portfolio planning tool, not just a policy.
3. From Policy to Platform: How VUL Is Reshaping Legacy, Liquidity, and Tax-Efficient Growth.
   Learn how VUL allows elite families to contribute existing portfolios, amplify death benefits, retain their chosen custodians and managers, and access meaningful tax and succession advantages across jurisdictions.
4. Why Every Family Office Should Revisit Variable Universal Life in Today’s Tax and Market Regime.
   For CEOs, founders, and family offices, VUL now functions as a flexible wealth platform—supporting liquidity, tax-deferred growth, estate equalization, and multi-jurisdictional succession in one structure
5. VUL vs. Traditional Insurance: The High-Conviction Case for America’s Sophisticated Investors.
   With universal life (including VUL) now representing a growing share of U.S. life insurance business, this analysis explains why sophisticated investors increasingly see VUL as an institutional-grade, long-term wealth solution.