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Variable life insurance is a form of life insurance policy that is reserved for the knowledgeable investor because you are required to select your investments. The insurance itself is a riskier version of whole life insurance policy.
Death Benefit
Just like a whole life insurance policy, you receive a death benefit with this policy. If you were to die, your family would receive a predetermined amount. This level can never fall below a certain amount although it can grow over the years depending on how the investments perform. If you always pay your premiums, you are guaranteed to receive this policy for life, much like a whole life insurance policy.
Variable Investments
The big difference between this type of insurance and whole life insurance is that you have several options to invest in for the cash portion of the policy. Part of your premium goes towards funding an investment account on your behalf. You can actually choose what you invest in, depending on your investment goals. You do not have to pay tax on the earning unless you surrender the policy. Also, there are fewer guarantees with variable life insurance so you need to read the policy closely.
