I have a very handicapped child. Would a variable universal life insurance policy for $1,000,000 on the life of her father be a good investment? We have a VUL with one company with $136,000 cash value and are thinking of exchanging it for a greater face-value VUL policy with a different company.

Paulette, Maryland

It would not be appropriate for me to tell you which policy or coverage amount is best for you. However, if you are looking to provide for the child after your death or your husband's death, any form of permanent life insurance (not just variable universal life, generally the most expensive option) would meet that requirement. You also can invest the money in mutual funds or other accounts, to be used for the child's support if you or your husband pass away. Also be aware that although VUL policies have an investment component, they are not traditional investment vehicles — part of each premium payment goes toward the cost of insurance.

As for upping the amount of life insurance coverage, you may not need to purchase a new policy from a different company. You may be able to increase the face value on your current policy without having to go through a new medical exam — ask your agent, or read your policy, to find out. Giving up your current policy means you will have to pay surrender fees to get out of the contract. If you buy a new policy altogether, you will need to go through the underwriting process again, including the medical exam, which could increase the premium over what you currently pay. Because you and your husband are now older than when you purchased the original policy, the premiums are likely to be higher in any case because the probability that you will die increases with age.

You may want to consider setting up a trust for any investment you select, to ensure that the funds are used exactly as you wish following your death. You can set up a trust and name a trustee who will manage the funds on behalf of your child. Read Life insurance trusts for child beneficiaries for more information.

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Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.