Variable Life Insurance: Where Performance is Tied to the Stock Market

Variable life insurance is a permanent type of life insurance product. It offers the advantages of whole life insurance, such as an investment vehicle and life insurance coverage, distinguishing it from regular term insurance. It builds cash value, invested in a separate account managed by well-known mutual fund families.

In essence, with variable life insurance, you can invest in sub-accounts within your life insurance investment account. It does require that you manage your variable life insurance policy somewhat, because the value of it will change over time and you might want to change your allocation like you would with any investment. It is a good idea to review your policy at least once a year.

Most people don't like to think of their own mortality, but if you don't prepare well, your family could pay a hefty price if you pass away. It's great if the cash value of your policy and your benefits increase. However, if they decrease and you don't pay attention, you could leave your family with fewer benefits and less of a legacy than you intended.

Variable universal life insurance combines features of the variable life insurance and universal life insurance types of policies. That is, it offers an investment vehicle as well as life insurance. The benefits vary according to the value of the equity investments. Premiums and benefits are adjustable at the option of the policyholder. If you own this type of policy, it's wise to review it at least annually, just as you would with any variable life insurance policy.

Values and Benefits Tied to Performance of the Stock Market

Variable universal life insurance is tied to the stock market; therefore, your premiums and death benefits can rise and fall as the market does. As long as your premiums are paid, however, you are still covered by a minimum amount of life insurance should you die while the policy is in effect.

Term insurance does not offer any type of investing. It is simply pure coverage for death benefits. In this way, term life insurance is often more affordable. It is also ideal for those people who want to keep their insurance products and investments separate from each other.

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