Variable Life Insurance
Variable Life Insurance is another type of permanent life insurance, and is much riskier than standard whole life and universal life. Variable life is a pure investment policy, and as such is much more expensive than the other types. However, it gives the policyholder complete control over his or her investment portfolio. It varies by insurer and policy, but most often the insured decide what they want to invest the cash value portion of their account in, whether it is stocks, bonds, or money market funds. There is usually an unlimited number of times that you can change your investment portfolio, but as with everything else, that is dependent upon the insurer and the policy itself.
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Variable Life Plans - Benefits and Risks
Because variable life is an investment policy, it is subject to the fluctuations of the market, and as such will risk losses as well as gains. There is no guaranteed cash value account return on the part of the insurer, and there is always a risk of having to surrender your savings.
These policies are also subject to profitable tax benefits, as the cash value earnings are not taxed until they are withdrawn--unlike traditional investments--which allows for larger amounts of growth. A variable life policy requires a great deal of attention and participation on the part of the policyholder, and as such, it is best if you are aware of market fluctuations and investment practices.
Variable life policies do have the potential for greater and quicker cash value accumulations than the other standard policies, but only if the insured is able to play the market. Therefore it is advised that you only purchase a variable life policy if you are confident in your investment abilities.
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