(MONEY Magazine) – If you're in the market for life insurance -- or even if you aren't -- don't be surprised if an agent tries to sell you on variable universal life, an increasingly popular policy that combines a death benefit with a tax-sheltered investment plan. Sales of these policies jumped an estimated 42% last year, making them today's hottest-selling type of life insurance, according to the Life Insurance Marketing Research Association. Their chief attractions: flexibility and a shot at tantalizing tax-deferred returns. Part of your annual premium goes to buy basic life insurance, while the rest goes into stock and bond funds that dangle gains of as much as 12% a year. What agents often gloss over in their sales spiel, however, is that variable universal's commissions can be twice as high as those for other types of insurance. What's more, a slew of annual fees and other charges can lop two to four percentage points a year off those hyped double-digit returns. Mark White, president of Direct Insurance Services, a San Diego-based discount insurance brokerage, believes that if you assume a more reasonable rate of return -- say, 7.5% annually -- you're better off with plain-vanilla universal life, which pays an interest rate each year based on the performance of the insurers'investments and provides comparable or better coverage at far lower premiums. For example, a 42-year-old man might pay $3,909 a year for a $300,000 Nationwide Best of America Flex-Pay variable universal policy that projects a cash value of $364,000 in 40 years. Or the same man could buy virtually the same coverage in a universal Protective Life policy for just $1,778 a year -- and save $2,131, or 55%, each year. Bottom line: Until variable policies' fees fall, stick to universal life or term insurance and sock the savings into investments that aren't riddled with return-zapping fees.