4 Advantages to Variable Life Insurance

Variable life insurance is a relatively new life insurance product that gives its owner new benefits. While the old market got to choose between whole of term life insurance, today's life insurance buyers have more options than ever before. The variable life insurance policy provides many advantages that other policies cannot match. How does a variable life insurance policy work and how can it help you? Let's look at a few things to consider about variable life.

1. Lifetime Policy

Much like a whole life policy, a variable life insurance policy is guaranteed for life. All you have to do is make your premium payment on time and you will never lose your policy. This is a great way to make sure that your family is taken care of regardless of what happens. Other policies only last for a certain term and then expire. You have no idea how long you will live. Therefore, why would you ever put an expiration date on your life insurance policy?

2. Transparent Funds

With whole life insurance, you make a premium payment and then have no idea where it went. Part of it goes towards the mortality benefit pool, part of it goes to administration costs, and part of it goes towards an investment of some kind. You have no idea how much is going towards administration and how much is being invested. With variable life insurance, you can see exactly where your money is going. You will get a detailed breakdown of each premium that you pay. It will show you how much is being invested which makes it easier to plan for your investment goals.

3. Flexibility of Investment

The biggest advantage of a variable life insurance policy is the flexibility with the investment portion of your policy. With whole life, you just pay your premium and a fund manager takes care of the investing for you. You learn about how much your cash value has increased, but you don't know what they're investing in. With variable life insurance, all of this changes. You know exactly what you can invest in and you make the decisions. The company will usually have four or five different options and you can change your investments a few times per year. This allows you to take responsibility for your investments and grow them at the rate that you want. Your cash value will accumulate depending on how well you invest the money. You have a separate account that is in your control.

4. Tax Advantages

There are a few tax advantages to a variable life policy. For one thing, the interest that you accumulate in your account is not taxable. Unlike other forms of investment, this can grow as big as you can make it grow and no tax will be charged. Another great benefit is that when you die, your beneficiary will not have to pay taxes on the money either. If you are a good investor, this is a great way to build a nest egg for your beneficiary tax free.  


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