One of the more dynamic aspects of VUL life insurance is selecting and managing subaccounts. This choice typically hinges on your risk tolerance, your familiarity with market instruments, and your overall financial strategy. Some popular strategies include:

Buy-and-Hold

In a buy-and-hold approach, you select subaccounts that align with your long-term objectives—maybe an index equity fund, a balanced fund, or a bond fund—and simply let them grow. You might rebalance annually or only adjust allocations if your risk profile changes. This approach favors consistency and takes advantage of compounding over time, though it won’t protect you from market dips.

Active Management

Those with more market-savvy or who enjoy trading could shift subaccounts based on economic cycles or performance. While this might capture some short-term gains, active management also introduces the risk of poorly timed moves and potentially higher transaction or transfer fees. Not every VUL policy allows frequent trades, so check the policy’s constraints or fees for switching subaccounts.

Risk-Based Asset Allocation

Some policyholders segment their subaccounts across varying risk levels. For instance, you might put 60% in equities, 30% in bonds, and 10% in a money market fund. This strategy is similar to mainstream retirement investing, aiming to balance potential gains with diversification. Periodic rebalancing ensures your allocations stay close to these target percentages over time.

Lifecycle or Target-Date Approach

A few insurers provide subaccounts that automatically adjust their allocations as a policyholder ages. In youth, they focus on growth, but over time they shift toward more conservative assets. While this automates some decision-making, it’s still important to keep an eye on fees, since some target-date or lifecycle funds may carry higher expense ratios.