What is Variable Life Insurance?

When discussing life insurance, you generally tend to hear about term life insurance and whole life insurance, with little discussion about other types of insurance available to you. But there are, in reality, a variety of other life insurance options for you to consider.
For example, there is variable life insurance, which accumulates a cash value all its own. That cash value can be treated in a similar fashion to a mutual fund, and used in a variety of different accounts. All of these decisions are up to you, the policy holder. In fact, this is how variable life insurance gets its name, because of the varied options a policy holder has with the cash value of the life insurance. Variable life insurance policies offer a unique level of flexibility to policy holders.
Also, premiums vary from month to month – another reason for the name variable life insurance. This serves in stark contrast to term life insurance and whole life insurance, since their payment structures are far more regimented. However, some may prefer a more structured pay schedule than that offered by a variable life insurance policy.
Variable life insurance is a form of permanent life insurance. Much like a whole life insurance policy, as long as you pay your premiums, there is no definitive end to the policy’s life, other than the policy owner’s demise. The biggest difference, though, between a variable life insurance policy and a whole life insurance policy is that there is no endowment age. This means that even if you reach an age where the cash value of your policy is equal to the death benefit amount, you won’t only receive the face amount of the policy.
As with any other life insurance policy with an accumulating cash value associated with it, the money comprising that cash value enjoys a tax-free status. And as stated earlier, the policy owner may invest those funds as he or she wishes. The result could be very profitable for the policy holder. However, the risk inherent in such a gamble is that, should those investments yield poor returns, the policy would then be in danger of lapsing. Essentially, that means the very existence of the policy would cease to be, without adequate funding behind it in the event of a death claim.
There are many benefits and drawbacks, many nuances, to a variable life insurance policy. Some may find that a variable life insurance policy works perfectly for their financial needs. Others may prefer to go the more traditional route, by purchasing either a term life insurance policy or a whole life insurance policy.
For assistance in figuring out whether a variable life insurance policy would work for you, reach out to us – we’re here to help you figure out how to make the best of all your life insurance options. If you feel that variable life insurance won’t work for you, we can help you with acquiring term life insurance quotes or whole life insurance quotes that better suit your needs.