have you ever wondered what a variable life insurance is hello
i'm rachel jones and you're watching calkin media well variable life insurance
is a type of life insurance that incorporates investing and life insurance elements
this is a permanent life insurance policy with distinct accounts including investment funds
and instruments like equity funds stocks bond funds bonds and money market funds
investment opportunities and policy loans are unique aspects of variable life policies
for insurance variable life insurance is sometimes referred to as a type of security that's due to
the investment risks variable policies are deemed as securities contracts accordingly
they're regulated by federal securities laws and sales professionals are expected to offer
a prospectus of available investment products to prospective customers under federal regulations
so here's how to understand variable life insurance coverage in the simplest way possible
it is an agreement between a customer and an insurance company is designed
to fulfill specific tax planning investment and insurance purposes
variable life insurance is a form of coverage that pays a set sum to the customer's family
or other beneficiaries in the event of death the financial worth of this type of policy
is determined by the number of premiums clients pay the policy's expenses and fees
and the performance of the policies investment alternatives which are typically mutual funds
if a person chooses to use a variable life insurance policy they will enjoy tax benefits like
tax deferred earnings accumulation the investment opportunities offered on the policy and the
favorable tax treatment of the policy's cash value growth make variable life insurance appealing
policyholders can access their policies cash value through a tax-free loan as long as the policy
is in place unpaid loans containing interest and principle may nevertheless limit the death benefit
profits or interest incorporated in full and partial insurance surrenders is taxable at the
moment of distribution so like mutual funds and other types of investments
a variable life insurance policy should be accompanied by a prospectus that also details
all policy charges sub-account expenses and fees new york life and prudential are two of the most
significant firms globally when it comes to providing variable life insurance products
because of its high cost variable life insurance is not an investment opportunity or suitable life
insurance for many people a traditional term life insurance policy would be beneficial if a person
only desires to assure a death benefit payout for family members because it gives more coverage
for a lower price in the meantime individuals will benefit more from traditional investing
the cash value of a variable life insurance policy on the other hand can only be effective
for people who have exhausted all other investing options so what are the benefits of a variable
life insurance policy well it shields family members against debts like student loans and
mortgages in the case of a premature death it provides recipients with a tax-free inheritance
which is helpful for high net worth individuals whose inheritance would otherwise be subject to
estate tax it pays final expenses such as funerals and other end-of-life expenses
it generates long-term savings with the option to invest in funds supplied by insurers
so what are some of the drawbacks of variable life insurance well it's not a suitable short
savings option as it's meant to fulfill long-term financial goals or offer a death benefit it is
necessary to keep enough cash in the account to pay policy premiums and if this is not
done the recipient will not be entitled to any death benefits it's substantially pricier than
term life insurance for a comparable level of protection for recipients and the cash value
investing options are restricted it comes with the risk of losing initial premium payments which is
compounded by the risks involved with investing decisions now if you like this information please
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