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Variable life insurance flexibility and build cash value.

The pros and cons of variable life insurance?

Variable life insurance is a kind of permanent coverage that permits you to select your own investments.Usually, variable life insurance is the most expensive type of cash value insurance.

variable  life insurance

This is because unlike whole life insurance, variable life insurance gives you complete control over your investments – be they stocks, bonds, or money market funds.

As your family’s financial condition changes over time, variable life policy allows you to select from a variety of portfolios (ranging in investment style and risk from conservative to aggressive) rather than earning a fixed rate of return.
All guarantees are based on the claims-paying ability of the issuing insurance company. Guarantees do not apply to the performance of the underlying portfolios, which will fluctuate and may lose value.

Who should consider variable life insurance?

  • Those seeking death benefit protection with the option to invest the policy’s cash value .
  • Policyholders interested in growth potential and the flexibility to adjust premiums and coverage.

Key features:

  • Policy allows growth potential through use of underlying portfolios.
  • Flexibility to adjust premiums and amount of coverage, depending on policyholder’s financial situation and needs.

How it differs from other life insurance policies:

  • Provides flexibility and the opportunity to build cash value.
  • Allows policyholder to choose from a variety of underlying portfolios.

Policy’s cash value depends on your investments , your insurance company cannot guarantee a minimum balance for this part of your policy.So additional freedom of variable life insurance comes increased risk.

Your insurer will not be responsible for your investment decisions, and if your investments perform poorly, you may be forfeit your savings.

However, if you have good investment, your cash value increase can be substantial .

Variable policies have substantial tax advantages . Policy cash value portion is not taxed until the policy is expire. These profits are not like those from standard personal investments, are not subject to capital gains tax even when you change investments – which means they can grow tax-deferred.

Who should consider variable life insurance?

  • Those seeking death benefit protection with the option to invest the policy’s cash value .
  • Policyholders interested in growth potential and the flexibility to adjust premiums and coverage.

Key features:

  • Policy allows growth potential through use of underlying portfolios.
  • Flexibility to adjust premiums and amount of coverage, depending on policyholder’s financial situation and needs.

How it differs from other life insurance policies:

  • Provides flexibility and the opportunity to build cash value.
  • Allows policyholder to choose from a variety of underlying portfolios.

Who should buy this coverage?

Those who are comfortable with their own investment ability should only buy variable life insurance.
If you are good at investing and don’t mind the extra cost, this is probably the most sound choice for a permanent life insurance policy.

Since the insurance company invests so conservatively you stand to profit much more in the market especially if you know the ropes and invest wisely. And the absence of capital gains taxes can actually make a variable policy and attractive investment method.

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