What is *Variable Life Insurance?
With variable life insurance, which is also permanent, you are able to invest a portion of your premium in various sub accounts, allowing you to potentially increase the policy’s cash value. The performance of these investments is not guaranteed, which means there is investment risk involved. The total benefit pool and account cash value will increase or decrease depending on the fluctuations of your investment options, premium payments, and non-guaranteed policy changes. Variable life insurance provides the flexibility and control of universal life, with more cash value potential.
Variable life insurance products have life insurance-related charges, including surrender charges and investment management fees. They are also subject to investment risk, including loss of principal, and part performance is not a guarantee of future results. In addition, under performance of the sub-accounts may cause the policy to lapse*, which makes life insurance not suitable as a short-term saving vehicle.
*Lapse or surrender of a policy may cause the recognition of taxable income.
Why would I want it?
Because you want to ensure that your family will have the money necessary to live in comfort, purchase a home, pay for college, and so on, should something happen to you. At the same time, you want flexibility and control.
You want a policy that’s permanent and accrues cash value, which you can borrow against for any purpose. You want to be able to borrow or withdraw funds from your account on a tax favored basis, which you can do in most cases – provided your policy remains in force. You want the option to add to your account value by paying an amount above your regular premium. You want the potential to earn a higher rate of return on your account investments, even though your rate of return could also drop.