Over the last decade, variable universal life insurance sales have struggled. As a new decade dawns, VUL may be ready for a comeback. Why? Because two things have changed–the market and the product.
The crisis of 2008-2009 exposed unimagined vulnerabilities. The collapse of the stock and real estate markets and the subsequent job insecurity has shaken confidence. High unemployment has many questioning sole reliance on employer-sponsored benefits, such as 401(k)s and group term life insurance, to prepare for retirement and protect families. Many have fled to the safety of fixed income products, despite extraordinarily low interest rates presenting the threat of insufficient returns. Meanwhile, government stimulus spending may point to rising taxes. 
Confronted with these risks, clients who are struggling to re-accumulate assets need tax-efficient ways to help manage volatility.
Insurers have unique expertise and products to address this dilemma. Poised at a historic threshold of market recovery and re-entry, VUL is one such product.
VUL innovations are emerging that provide shell-shocked individuals the protections they need and a way to put their money back to work and keep it invested through volatile times.
Some recently revamped VULs offer, for an additional fee, the ability to allocate a portion of policy premiums to an optional account that works to stabilize volatility. It does this through index-linked crediting with growth caps and floor cushions. Tied to the performance of a major equity index, the account's caps and floors are set in time segments and typically guaranteed not to change during those periods.
With this type of "equity stabilization option," the growth cap allows VUL policyholders to participate in the upside potential of the equity index, while the floor can help mitigate losses if the index takes a steep downturn.
The ability to direct premiums after insurance costs into a "stabilized account" helps smooth the impact of volatility on that portion of the VUL's cash value, soothing policyholder nerves and enhancing the potential for long-term returns. Knowing the stabilized account reduces or eliminates losses and can give policy owners the comfort needed to remain invested, even during periods of extreme volatility, and the confidence to allocate remaining premiums more aggressively. Gains from other policy investment portfolios can be swept into the "stabilized account," without triggering a tax event.
Robert "Bucky" Wright is divisional vice president and chief sales officer of AXA Advisors, LLC, New York City the retail distribution organization of AXA Equitable Life Insurance Company. His e-mail address is 
