Looking to protect your family financially while also building savings? Variable life insurance lets you put extra cash into investments, so it can potentially grow faster over time.
Variable life insurance is a type of permanent life insurance. Unlike term life, which covers you for a set number of years, permanent insurance protects you for your whole life, as long as you pay your premiums. Once you pass away, your beneficiaries receive a cash payout called a death benefit.
Like all permanent life insurance products, variable insurance also allows you to build cash value over time in your policy. You can borrow cash when you need it, use it as collateral for a loan, or even put it toward your premiums in some cases.
With a variable life policy, your cash value grows based on the performance of the stock market and other market factors. While it’s not guaranteed to increase at a certain rate like other permanent life policies, you can potentially earn more if the market performs well.
As with any life insurance policy, you make monthly or annual payments called premiums to keep it active. Each time you make a payment on your variable life plan, part of it goes toward a cash value account that’s invested in a variety of sub-accounts, similar to a mutual fund. The value of your cash account will vary depending on the market, but it generally fluctuates within a set range.
If you’re considering a variable life policy, one thing to keep in mind is that your cash value is part of your policy’s death benefit. That means you’ll need to replace any funds you take out to receive your full payout. Also, if you decide to cash out the account completely, your policy will end automatically.
Build savings over time that you can borrow when you need it or use your variable life policy as collateral for a loan.
When you die, your insurance company will distribute the unused portion of your cash value as part of your death benefit, which is tax-free in most cases.
If you’re open to taking some risk, you can potentially earn more over time by participating in the market.
Like all types of permanent life insurance, you’re covered for life, so your family can count on protection if something happens to you.
That depends on your financial goals, budget, and unique circumstances. Like all permanent life policies, variable life is generally more expensive than term life insurance. If you’re just looking for a death benefit, term life is probably a better fit.
Since your cash value depends on the performance of the market, you have the potential to earn more with variable life insurance than whole life insurance, where your cash value grows based on a fixed rate. On the flip side, your cash value could earn less or even go to zero because of fees and low market performance. Ultimately, the right policy depends on your budget, financial goals, and risk tolerance. A life insurance agent can help you find a policy that meets your needs.
All permanent life insurance plans offer guaranteed, lifelong protection and a cash value component, so the right choice comes down to flexibility and the type of cash value you’d like to have.
Your cash value is meant to be available for use as needed during your lifetime. Once you die, your cash value typically goes back to the insurance provider and your beneficiaries receive the remaining death benefit.
Over the years, your policy’s cash value can eventually build up to the full value of your death benefit. Once that happens, you receive the cash value and your policy comes to an end. Most permanent life insurance plans are designed for this to happen when you turn 100. This can get complex, so talk to an agent about your options.
A medical exam may be required to secure a variable life policy as it helps determine whether you qualify for life insurance and what your rates will be. eFinancial makes it easy and convenient for you to take your exam, at no cost to you. Learn more about taking a medical exam here.
At eFinancial, we’re committed to helping you find the right life insurance options to meet your needs. You’ll have access to high-quality, affordable insurance products from top-rated insurance companies. Our agents can guide you through the process and support you every step of the way.
To get started, request your free, no-obligation online quote or call 800-957-9525 to talk with one of our agents.
