Variable Life Insurance
What Does Variable Life Insurance Mean?
Variable life insurance is a type of permanent life insurance that allows the insured to allocate a portion of their premium payments into the insurer’s portfolio of investment accounts. Upon the policyholder’s death, the beneficiaries receive both the death benefit and any returns from the investments.
Insuranceopedia Explains Variable Life Insurance
The benefit of variable life insurance is that it offers the potential for a life insurance policy to generate higher returns through tax-deferred investments, which may increase the policy’s overall value and ultimately benefit the beneficiary more. Additionally, the interest earned can be applied toward premium payments. However, if the investment funds perform poorly, the policyholder may face higher-than-expected premiums, and the cash value or death benefit could decrease, though it will not fall below a predefined minimum. Finally, this type of cash-value policy does not permit withdrawals during the insured’s lifetime.
