Variable Life Insurance
Variable life insurance offers the ultimate in life insurance
flexibility. The main principle governing variable life
insurance is that you control your life investments instead of
the life insurance company managing them on your behalf. This
enables you to select the level of risk that you subject your
life insurance fund to, paving the way for you to make
substantial interest gains on the cash-in value of your life
insurance policy.
How does variable life insurance work?
All life insurance products are a form of investment vehicle.
Standard no cash-in value life insurance policies like term life
insurance invest life insurance premiums in ultra low-risk funds
that are often obliged to return a certain level of interest.
This provides the life company with confidence in receiving a
tangible level of return, which is transferred through to the
life insurance policyholder by way of a guaranteed lump sum
payment upon death or terminal illness.
Variable life insurance is different from standard types of life
insurance as the life company hands the investment reigns over
to the policyholder. The life company may allow a percentage of
the fund to be invested, or in some cases, all of the fund to be
invested by the policyholder. Variable life policies come with
the disclaimer that the life insurance company takes no
responsibility for the performance of the variable life
policyholder's investments. Therefore, if the investments
perform poorly the policyholder accepts the consequences that
there will be little or no cash surrender value when the
insurance is redeemed.
Is variable life insurance for you?
It is very important to think long and hard about variable life
insurance before opting to take it on, as there is a high level
of risk involved with this type of life policy. Ideally,
variable life policies should only be taken out by seasoned
investors who know there way around the investment markets. If
you've never invested in the stock market before then a variable
life policy is probably not for you.
However, if you are confident in your investing abilities this
is what you stand to gain from taking out a variable life
policy...
1. Variable life policy potential: A variable life policy has
the potential to make substantial interest gains that are much
higher than on a standard term life insurance policy. Whereas
you might pay a small premium per month for a