Variable Universal Life FAQs
You may have questions about your Variable Universal Life policy (VUL), and we want to help you get the answers you need. If the information below doesn’t address your questions, or if you need additional help, please contact us. To make sure your call is directed to the team that can best assist you, please use the phone number on the latest correspondence you received from us.
General:
A variable universal life (VUL) policy is a type of permanent life insurance policy with a built-in cash accumulation component that allows for the investment of the cash value in available options. Generally speaking, as long as your cash surrender value can support the ongoing monthly deductions, the premium you choose to pay is flexible.
The performance of your policy is impacted by several factors: the payments you make to the policy, the rates of return of the options in which you invest your cash value, and the charges we deduct each month for the cost of insurance and any other expenses. It is important to note that monthly deductions can increase as you get older because charges can increase, for example, your cost of insurance.
Withdrawals and loans from your cash value can also impact whether your policy will remain active. If your policy is ever at risk of lapsing, you will receive correspondence from us informing you of the actions needed to keep your policy active. Your annual statement will also provide you with the status of your policy as of the date of the annual statement.
If your policy is active, that means your life insurance is in force and still in effect. Generally speaking, for your policy to remain in active status, the cash surrender value must be sufficient to cover the monthly deductions (which include the cost of insurance, the cost of any benefits provided by riders and any applicable expense charges).
You can review your annual statement to view your values as of your last policy anniversary date. This statement will include your policy face amount, death benefit amount and your cash surrender value.
If you want to know your current policy values, please contact us.
The annual statement is generated each year on the policy anniversary for policies that are in force. Typically, you can find common terms defined, your policy activity over the past year, your current policy values and how they were calculated.
It’s important to examine your annual statement carefully, as it will provide key information on the status of your policy as of your anniversary date. It also projects how long your coverage will last, based on various hypothetical scenarios.
At the time you purchased your policy, the premium you decided to pay was determined based on charges in place at the time of the sale as well as hypothetical rates of return and other hypothetical assumptions. The cost of insurance charges increase with age and your investment performance can also affect the cash value in your policy. Generally speaking, in order for the policy to remain in force, the cash surrender value must be sufficient to cover the monthly deductions.
In addition, if you missed any planned premium payments, made a withdrawal at some point, or took out a loan, this could negatively impact the cash surrender value under your policy. A low or declining policy cash surrender value may be an indicator that your policy is at risk of lapsing.
If your policy is in jeopardy of lapsing, then you may have received a bill that was higher than your regular payment. That amount, labeled Premium Due to Retain Coverage, covers your regular monthly deduction that was due, plus the next two monthly deductions that will be due during the 61-day grace period. Generally speaking, your cash surrender value must remain sufficient to support the monthly deductions in order for your policy to remain active. We would suggest that if you received this type of notice you should contact us to discuss different things you can do now to help keep your valuable coverage in the future.
If, at the time your policy lapses, you’re eligible to apply for reinstatement of your policy, you will receive a letter informing you of the amount needed to reinstate your policy and an application to request reinstatement. Your application must be returned to us along with payment of the amount due. This amount due will cover the next two monthly charges after the payment is received.
If your application for reinstatement is approved, you will need to pay your planned premium payments, and you may also need to increase your premium payments and/or reduce your amount of life insurance to retain your coverage. If your application for reinstatement is not approved or is incomplete, the amount paid for reinstatement will be refunded.
If you have misplaced this information, please contact us to learn about your current eligibility and the requirements to reinstate your coverage.
Please review your annual statement which provides you with information as of the dates shown on the annual statement or log into MetOnline to view where you are currently invested.
You can make changes to your investment lineup or transfers within your investment lineup by logging into MetOnline and accessing account management for allocations. You can also request the transaction be completed over the phone or request the necessary form be sent to you by calling the phone number on the latest correspondence you received from us.
Loans, Surrenders or Withdrawals:
If you are the owner of the policy you can call the number in your last correspondence to speak with a customer service representative for your policy and request a partial withdrawal form. If you decide to take a partial withdrawal:
- You will reduce your cash surrender value which may impact the performance of your policy. If your cash surrender value is not sufficient to support your monthly deductions, now or in the future, your policy will be in danger of lapsing.
- This transaction may result in a withdrawal charge.
- You may incur adverse tax consequences.
If you are the owner of the policy you can call the number on your latest correspondence to request a surrender form. If you decide to surrender your policy:
- Your policy will have no further value and no death benefit after that date.
- This transaction may result in surrender charges.
- You may incur adverse tax consequences.
To find out if your policy has a value to borrow against please visit MetOnline or call the number on your latest correspondence.
If you decide to take a loan from your policy:
- Your policy’s cash surrender and death benefit values will be reduced by the amount of the loan and any unpaid interest.
- You will be billed for your loan interest annually. If not paid the loan interest will be added to the loan principal.
- If the policy’s cash surrender value is reduced due to the loan principal, now or in the future, and you can no longer support the monthly deductions your policy will be in danger of lapsing.
- You may incur adverse tax consequences.
While you are not required to repay the loan principal out of pocket, we encourage you at a minimum, to pay the annual loan interest. If the loan interest is not repaid as it becomes due, it will be added to the loan principal and incur additional interest charges. The amount of the loan including accrued unpaid interest will be automatically deducted from any policy surrender value or death benefit at the time of payment. In the event the cash value is not sufficient to cover the policy loan balance (including accrued loan interest), any surrender charge and the monthly deductions for the policy month, the policy will lapse without value unless payment of the required amount is made by the end of the grace period.
Generally, any monies withdrawn up to the policy owner’s cost basis (the amount of premium dollars you have paid into the policy minus previous nontaxable distributions) are not considered taxable, and loans are not taxable when received. However, in the event of policy maturity, surrender or termination (other than as a death benefit payment), the amount of the loan, plus all unpaid interest, is considered to have been received by the policy owner. To the extent that the loan plus interest amount exceeds the cost basis, there would be a taxable gain. This amount must be reported by MetLife under IRS guidelines.
When you take a loan from your life insurance policy, you are borrowing from the cash value. The Policy is the sole security for such loan. For the borrowed portion of the cash value, we charge loan interest, but you also continue to earn interest on the loaned amount, although at a rate lower than the rate charged.
1. By mail
- Please note in the memo section of the check your policy number and whether the payment is for loan repayment. Otherwise, the funds will be applied as a premium payment. Mail your payment to the address provided on your last loan statement.
2. You can also contact us using the number on your most recent correspondence and we can provide you with loan repayment stubs to be submitted along with your payments to ensure that they are credited to your loan. We can also assist you with setting up an automatic draft arrangement to repay your outstanding loan principal.