How much do you know about life insurance? What about variable life insurance? This policy allows you to combine some of the best features of a permanent plan, while still allowing you the freedom to invest. In that sense, it’s different from any other product on the market. It also requires a bit more participation on your end, as well as the guidance of an experienced insurance agent—like those at Freedom Insurance Agency.
No, it’s not a trick. Variable life insurance is considered permanent because it will remain in force for your whole life. As long as you continue to pay the premium, you won’t have to worry about it lapsing or expiring at a certain age. This is the opposite practice of term life insurance, but this feature is shared by both whole life and universal life. Permanence also offers another benefit: cash value.
Each month when you pay your premium, a portion of those funds go toward your death benefit. That’s the traditional part of the policy that pays a lump sum to your chosen beneficiaries if you die. This amount varies from plan to plan, but typically the larger it is, the more you’re going to pay. Another part of this premium goes into a savings component known as its cash value. The longer you have the policy, the more this can grow. But with variable life insurance, you have more options on how to use this investment opportunity.
With other permanent policies, the cash value grows similar to interest on a savings account. It’s mainly controlled by the insurer, although you can borrow against it or withdraw it early—with some restrictions. Still variable life insurance takes it a step further. By allowing you to choose from various funds, you can increase your cash value at a faster rate.
Conversely, you can also lose some of this value if your chosen fund underperforms. Unlike a whole life policy, there are no guarantees based around your cash value—that’s why the term variable is much more fitting. Still, many people are drawn to the potential of this plan. Especially the favorable tax treatments that apply to both the benefits and the cash value.
If you’re interested in learning more about variable life insurance and obtaining a personalized quote, contact our office today! Our knowledgeable agents can answer all your questions and find the perfect policy to meet your needs.