What Is Variable Life Insurance?
Most want and need life insurance but there are some who don’t know what kind of life insurance to purchase. Life insurance can give you peace of mind, give your family protection and financial stability when the head of a family dies. The main function of a life insurance policy is to give help and support to those left behind, after the policy owner dies.
Variable life insurance is permanent life insurance that lasts until you die but because this insurance is named variable, you are allowed, if you want, to take a certain percentage of your premium and place it in a separate account such as a bond fund or money market fund, or both.
Variable life insurance is a type of permanent life insurance but it has more terms that are flexible and includes possibilities for investments. Variable life insurance has offerings that allow you, the policy holder, to alter the death benefit, the timetable and amount of your premium payments. In addition, it also gives you the opportunity to invest the value of your cash in funding options such as bonds and stocks.
The pros of variable life insurance make it a more attractive kind of insurance such as being able to use earned interest or capital gains toward your policy premiums and the taxes with this insurance are deferred. In addition, you can also borrow against the cash value of your policy if you are in need of some money.
The cons of variable life insurance are few but should be noted because there is seldom a minimum guarantee on cash value when it comes to a death benefit. This means that you, the policy holder, assume all risks with investments and if your investments turn out poor, you risk lowering the amount of cash value and death benefits that your beneficiaries could receive upon your death. Also, the investment part of some variable insurance policies is quite high, sometimes costing 10 to 15 times more than a low-cost index fund.
So, before purchasing a variable life insurance policy, compare life insurance policies, determine the amount of investment and risk you can afford, and then proceed.
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