What is Variable Life Insurance?
Variable life insurance is a permanent life insurance policy with an investment component. The policy has a cash value account, which is invested in a number of sub-accounts available in the policy. A sub-account acts similar to a mutual fund, except it’s only available within a variable life insurance policy.
Here’s the definition from AccuQuote for Variable life insurance: “A form of cash value life insurance in which premiums are fixed, but the death benefit and other values may vary, reflecting the performance of investment subaccounts that the policyowner selects.” There is a certain amount of risk when you purchase this type of policy and it may not always yield the type of returns that an agent initially advertises. You should ask your agent a lot of questions and find out other options as well. It may that buying term and investing the difference may work out better for you.
A. Variable life insurance is like whole or cash value life insurance in that it accumulates a cash value. Variable life differs in that the funds are invested in index or equity based investments which can be more responsive to changes in interest rates and inflation. There is a guaranteed minimum death benefit and the potential of increased insurance benefits based on favorable performance. The cash value accumulation, which is largely attributable to the effect of interest over time, is not taxed as it accumulates. There are various optional riders that can be added. For more information on this type of life insurance protection, please contact our customer service area.
Life insurance under which the benefits relate to the value of assets behind the contract at the time the benefit is paid. The assets fluctuate according to the investment experience of funds managed by the life insurance company. Premium payments may be fixed as to timing and amount (scheduled premium variable life) or subject to change by the policy holder (flexible premium variable life). Go to top of page Mortgage Protection Insurance FAQs Q: What if we already have Mortgage Insurance? Many people confuse Mortgage Protection with Private Mortgage Insurance (PMI). PMI is a Gap insurance policy required by mortgage lenders and secured at the time of closing. The policy normally covers 20% of the mortgage or the basic mortgage interest. This means, if you are unable to make your mortgage payment, the lender is covered but you are not. Mortgage Insurance policies benefit individuals. Q: Why do I need Mortgage Insurance Protection? A: Mortgage Protection Life Insurance is designed to re
Variable universal life insurance is essentially universal life insurance that includes an option to “invest” cash values in mutual fund type accounts that are made up of stocks and bonds . Like universal life, as premiums are made, costs of insurance, policy fees and expenses are deducted and the balance is directed toward investments called sub-accounts. These sub-accounts are actual investment accounts that fluctuate based on the performance of the underlying stocks and bonds. For more information see on variable universal life see, How a Variable Universal Life Insurance Policy Works.
Related Questions
- Why is it better to have an irrevocable life insurance trust purchase alife insurance policy on the donor, rather than have the heirs themselves own a permanent life insurance policy with the premium paid by the heirs with gifts by the now- living donor?
- Are life insurance benefits considered part of a decedents estate?
- Do life insurance renewal commissions count as wages?
