Variable Universal Life Insurance Lawyers — Bakhtiari & Harrison

Written and reviewed by

David Harrison, Partner — Bakhtiari & Harrison

Admitted: CA | NY · Super Lawyers 2015–2026 · Former NYC Assistant District Attorney · Former Morgan Stanley In-House Counsel · Series 7 Licensed · Last reviewed: May 2026

Variable universal life insurance lawyers at Bakhtiari & Harrison represent investors in variable universal life (VUL) insurance fraud and unsuitable recommendation claims in FINRA arbitration and securities litigation. VUL policies are both insurance contracts and securities — regulated by both the SEC and state insurance commissioners — and combine some of the highest costs in financial services with investment risk that most purchasers do not understand they are taking. They are routinely recommended as tax-advantaged wealth accumulation vehicles when they are in fact complex, expensive, and frequently unsuitable for the investors who purchase them. David Harrison is a former Morgan Stanley Dean Witter in-house counsel who began his career as a Series 7-licensed registered representative at Shearson Lehman Brothers. Investor cases are handled on a contingency fee basis — no recovery, no fee.

What is variable universal life insurance?

A variable universal life (VUL) insurance policy is a permanent life insurance contract that allows the policyholder to invest the policy’s cash value in mutual fund sub-accounts — similar to a variable annuity, but structured as a life insurance policy. The cash value grows (or declines) based on the investment performance of the chosen sub-accounts, and the death benefit fluctuates accordingly.

VUL policies are classified as securities because the investment risk is borne by the policyholder — unlike whole life or universal life policies, where the insurance company bears the investment risk. Agents who sell VUL policies must hold both a life insurance license and a securities registration (Series 6 or Series 7). VUL policies are regulated by the SEC as securities and by state insurance commissioners as insurance products.

The full cost structure of a VUL policy

Cost of insurance (COI): the monthly charge for the death benefit component, which increases as the policyholder ages.
Administrative fees: flat monthly or annual administrative charges regardless of account value.
Sub-account expenses: the mutual fund management fees within the policy’s investment options, typically 0.5-1.5% annually.
Surrender charges: steep charges (often 10-15% declining over 10-15 years) if the policy is surrendered early.
Premium expense charges: a percentage deducted from each premium payment before it is invested — typically 5-9%.

The combined effect of these charges means that VUL policies require substantial and sustained investment returns simply to keep pace with the policy’s costs — let alone generate meaningful cash value growth. Many policyholders discover that their policies have insufficient cash value to cover ongoing costs, resulting in premium calls or policy lapse.

Common VUL misconduct claims

Suitability violations: VUL policies are generally suitable only for investors with a genuine need for permanent life insurance, a long investment time horizon (20+ years), high income tax exposure that makes tax-deferred growth valuable, and the financial capacity to sustain premium payments over the long term. Recommendations to investors who lack these characteristics are suitability violations.
LIRP misrepresentation: VUL policies are frequently marketed as “life insurance retirement plans” (LIRPs) — suggesting that the tax-free policy loan provisions make them superior retirement savings vehicles. The reality is that accessing cash value through policy loans requires maintaining the policy’s death benefit (and paying ongoing COI charges), and that the tax-free loan treatment depends on the policy not lapsing.
Illustration misrepresentation: VUL illustrations showing projected cash value growth frequently use unrealistically high assumed returns to make the product appear more attractive than it is in practice.
Premium adequacy failures: agents who design VUL policies with insufficient premium levels — creating policies that cannot sustain themselves over time — set investors up for policy lapse and the loss of both the insurance protection and the accumulated cash value.

Frequently asked questions — variable universal life

My VUL policy is lapsing — what can I do?

A lapsing VUL policy means the cash value has been exhausted by the cost of insurance charges. Contact Bakhtiari & Harrison immediately. If the policy was inadequately designed (with insufficient premium levels to sustain it over time), misrepresented (with illustrations showing unrealistic returns), or unsuitable (sold to someone who did not need permanent life insurance), you may have a viable claim against the selling agent and their broker-dealer.

My agent said VUL was better than a 401(k) for retirement savings — is that true?

This is one of the most consistently misleading sales claims in the insurance industry. For most investors, a 401(k) or IRA is a significantly better retirement savings vehicle than a VUL policy — lower costs, no insurance charges, and the same or better tax treatment in most circumstances. The VUL-over-401(k) argument typically relies on the policy loan provision and ignores the ongoing cost of maintaining the death benefit needed to access those loans. Bakhtiari & Harrison evaluates VUL suitability claims at no charge.

Can I file a FINRA arbitration claim against my VUL agent?

Yes, if the agent is FINRA-registered — which is required for any agent selling VUL policies. Claims against VUL-selling agents and their broker-dealers are handled through FINRA arbitration under the same procedures as other investment fraud claims.

For a full overview of the firm’s investment product failure practice, visit the Product Failure page.

Contact a variable universal life insurance lawyers — free consultation

Contact Bakhtiari & Harrison for a free, confidential consultation. Our FINRA attorneys evaluate every potential investor claim at no charge. Investor cases are handled on a contingency fee basis — no recovery, no fee.

Investor cases are handled on a contingency fee basis — no recovery, no fee.

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