Variable life insurance is closely tied to universal whole life insurance quotes. You may remember that the latter is a premier financial vehicle that provides investment opportunities of the policy’s cash value in high yielding ventures, thus actually increasing the value of the policy tremendously. In addition to the foregoing, it is possible to borrow against the policy and of course repay the funds borrowed. There are several tax advantages to having a universal life insurance policy as an investment tool, and a variable life insurance policy is no different.
What makes the variable part to interesting to the savvy investor is the notion that the company’s cash value may be invested in mutual funds that might be considered high risk by some. It is noteworthy that the policy holders many times have the power over deciding how much to pay in premiums in any given month – only restricted by internal revenue guidelines – as this directly affects the profit margin of the policy’s investment values. Some have discovered that a variable life insurance policy is a very nifty way of avoiding tax liabilities and if they are considering gifting money to family members and friends or simply to invest for tax free profit, savvy investors almost always turn to this kind of policy.
Yet there is another thing you need to know abut variable life insurance: since you, as policy holder, do have the power to control the investment of the cash value, you also assume the risk. Make risky investments that end up going bad, and you will see a dangerous decline in the policy’s worth, just as you would see a hefty increase if your investment decisions prove wise. In some cases this has led to complete lapses of the policy which not only eliminated the death benefit but also any of the investments the insured had made. Some insurance companies seek to draft their variable life insurance policies in such a manner that at least the death benefit remains intact when payments are made on a monthly basis.
If you are thinking of taking on a variable life insurance policy to not only protect your family and your assets but also to build an investment portfolio, it is well worth your time and effort to do a lot of legwork to understand the inner workings of such a policy and how various different insurers structure their variable life products. Some will offer directly connected investment funds while others will literally give you free reign and propose to be little more than the account where the money will be deposited and from which it will be withdrawn. The latter of course presupposes that you are a very savvy investor now and will continue on to proceed through life in this fashion. If investing and market research is neither your forte nor your keen lifelong interest – such as you see the world today – then you will be better served to have a more structured variable life insurance policy that does not give you quite as many choices and options.
