Variable Life Insurance
Variable life is another form of permanent insurance. This policy allows the utilization of investment funds such as stocks, bonds, or fixed income investments. You can usually change these investments two to four times per year depending on the agency. The main difference between universal life and variable life is the amount of control you have over your investments, with much more control associated with variable life.
There is a certain amount of risk associated with this policy, as your investments can not only make you money but lose the money you have. The death benefit, though, can never fall below the amount of insurance originally purchased. It can, however, go up if the cash value of the policy increases. The cash value is what you invest. Sometimes, a minimum cash value is guaranteed, even your investment choices do poorly. Of course, this amount would be less than if you invested in universal life insurance, hence the risk.
If your investments perform well, variable life insurance can be a great option. You can then divide the cash value of the policy and spread out your money to many different types of investments. You can change these types of investments a certain number of times per year without being charged, depending on the company.
However, if your chosen investments do poorly, you forfeit the entire cash value of the policy. This is a significant risk, and therefore variable life is the best option for experienced investors who can risk losing.
