What is Variable Life Insurance? What type of coverage does it provide? Should you get one?
If you’re wondering about the answers to these questions, then you have come to the right place. In this article, we will talk about Variable Life Insurance, its pros and cons, and more!
What is Variable Life Insurance?
Variable Life Insurance is another form of permanent life insurance. But what makes it different from others?
Well, with VLI, you get a cash value component that may grow over the life of your policy. The cash value of variable life insurance is used for investing. And it also provides a permanent death benefit for your beneficiaries.
With a VLI, part of your monthly premium payment will go into a separate account where it will be invested. It allows the policy owner to take part in a variety of different investment options to grow your cash value. You can choose to invest in stocks, mutual funds, bonds, money market bonds, and more.
Variable Life Insurance Pros
There are a lot of pros and cons when it comes to Variable Life Insurance. Below are some of its benefits and advantages.
- Fixed monthly premium for your whole life.
- Guaranteed death benefit for your beneficiaries. Your beneficiaries will still get a death benefit once you pass away, no matter what the situation with your investment is.
- The funds that are in the underlying investment account are regulated and tax-deferred. This could mean that the money may grow quicker.
- Wide variety of investment options.
- The policy owner also has the option to borrow from the investment part of a VLI at limited or no interest.
Variable Life Insurance Cons
Keep in mind that VLI also has its own set of cons. Check them out below.
- Not the most affordable type of insurance
- Higher rates for additional benefits
- No guaranteed growth for your investment with the underlying market fluctuation
- The policy and investment options tend to have high fees that can eat away at your returns