Variable life insurance policies are a type of permanent life insurance. The policy is designed to provide death benefit protection and provide cash value growth that is tied to the performance of financial markets.These policies have become popular due to their potential for cash value growth, death benefit protection, and tax benefits.
The primary elements of a variable life insurance policy are the death benefit, the cash value, the premium payment schedule, and the underlying investments.
Death Benefit: The death benefit is the primary purpose of a variable life insurance policy and is guaranteed, meaning your beneficiaries will receive a death benefit regardless of how the underlying investments perform.
Cash Value: The cash value of the policy is determined by the performance of separate accounts, which are investment options chosen by policyholders. The cash value is available to use generally tax-free for policy loans and other financial needs.
Premium Payment Schedule: Within a variable life policy, premiums can remain flexible and can be adjusted, based on your needs and investment performance.
Underlying Investments: Investment options within the policy are usually mutual funds, bonds, and other securities. Policyholders are able to choose their investments, based on their individual risk profiles, financial goals, and risk tolerance.
Overall, variable life policies have the potential for death benefit protection, cash value accumulation, and tax benefits. It is important to keep in mind that these policies have underlying market risk and your investments can go up as well as down, so proper oversight and understanding of the policy’s features is key to success.
