Variable life insurance is one of the policy options many individuals can select to provide financial coverage. It is sometimes called variable appreciable life insurance.
This type of insurance provides a cash value account and lifelong protection. Generally speaking, they have a higher potential to earn more during your lifetime. This is in comparison to a permanent life insurance policy. It allows for more options in terms of investments. That gives some people more opportunity to increase their coverage.
How Does It Work?
This is a type of permanent life insurance. Once you buy it, you will maintain it throughout your lifetime. It only cancels when you pass away or stop making payments. When you make a premium payment, it pays for the cost of the insurance and fees. These funds cover the death benefit paid at the time of your death to your beneficiary. The insurer also invests a portion of the premium into securities. These work much like a mutual fund. They can accumulate cash value over time.
With these accounts, pay attention to the way the value adds up. If the investments do well, they will increase the death benefit paid at the end of your life. However, you can also usually withdraw those increases now. You can also use those increases in value as a type of collateral. That means you can borrow against it throughout your lifetime. In other words, you can get money when you need it.
The difference here relates to the underlying investments within the policy. They tend to be more lucrative. This could mean more risk. It also means that you could earn more. Many factors play a role in this decision.
Who Benefits from Variable Life Insurance Policies?
If you are young and healthy, this type of insurance may be available to you. It is often less expensive when you are younger. The policy is likely beneficial for those who are willing to take on a bit more risk. It is also usually beneficial for those who want to have a low-cost way of building a portfolio. It can also provide borrowing options over your lifetime. However, there are usually fees involved. Individuals also need to consider the risks associated with these policies.
Work with your life insurance agent. Compare variable to traditional permanent life insurance policies. Create a plan that addresses each one of your needs. Doing this can shore up your risks and give you confidence going forward in protecting your family.
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