Variable Life Insurance
Variable Life Insurance policies are a type of permanent life insurance that offer fixed premiums and a minimum death benefit. It's also a type of security. Unlike Whole Life Insurance, its cash value is invested in a portfolio of securities.
As the policyholder, you are free to choose the mix of investments that are put in use you’re your policy, which can include equity funds, money market funds, stocks, bonds or a combination of each.
The death benefit amount and cash value amount can be influenced by market fluctuations. Variable life insurance policies have the potential to earn higher interest and higher investment gains than other types of permanent life insurance, which means that variable life insurance policies can also come with some risk.
To help mitigate risk, many variable life insurance policies will guarantee that the death benefit amount will not drop below a pre-determined minimum. Some policies may offer a minimum death benefit guarantee through a rider that you can add to your policy for an additional fee.
Just like other types of permanent life insurance, the cash value in a variable life insurance policy is accessible through withdrawals and loans.*
Who Should Buy Variable Life Insurance?
Variable life insurance might be a good option for someone who wants a higher growth potential than what most whole life insurance policies can offer. This can be especially true for people who may be able to afford to take a chance on a market-dependent variable life insurance policy due to other investments they have in place.
Some people may also consider variable life insurance if they wish to leave behind an additional gift to their loved ones by adding them as a beneficiary for their policy’s death benefit payout.
Is Variable Life Insurance Right For You?
If you wish to take a more aggressive approach to growing your life insurance policy’s cash value a variable life insurance policy may worth considering the right choice for you.
Variable Life Insurance is considered an investment product purchased by the consumer, and therefore, represents a securities contract regulated by the Federal Government and must be sold with a prospectus.
*A permanent policy's cash value can be used to pay premiums, or may be accessed via loans or withdrawals. Policy loans and withdrawals will reduce cash values and death benefits, and may cause the policy to lapse. Additional premium payments may be required to keep the policy in force. Withdrawals may be subject to a surrender charge. Withdrawals and any unpaid loans are subject to ordinary income tax and, if taken prior to 59 1/2, a 10% federal additional tax.