What is variable life insurance?

Life Insurance
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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.

I’m not a huge fan of this type of Life Insurance.  I’ve found people can better serve their protection planning needs with Universal Life policies, with additional benefits for things like Terminal Illness and Chronic Illness riders. With a fully invested portfolio, there is just too much market risk for many people who actually need the underlying life insurance coverage. Bad few years in the market could cause the cash value to drop and put the death benefit in jeopardy when you need it the most.

*The investment return and principal value of variable sub-accounts will fluctuate. Your cash value, and perhaps the death benefit will be determined by the performance of the chosen sub-accounts. Variable universal life insurance policies typically include mortality and expense risk charges, administrative fees, and fund expense charges.

Withdrawals may be taxable and subject to surrender charges. Policy Loans and withdrawal will reduce the policy’s cash value and death benefit. Loans are subject to interest charges.

Hope this helps,

By David Rae Certified Financial Planner™, Accredited Investment Fiduciary™

 

Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA, SIPC, a Registered Investment Advisor. Trilogy Capital Trilogy Financial and NPC are separate and unrelated entities.  The opinions voiced in this article are for general information only and do not constitute an endorsement by NPC. NPC does not provide tax advice.  www.FinancialPlannerLA.com

September 2008
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