Variable life insurance offers the ultimate in life insurance flexibility. When it comes to variable life insurance, the main principle that is governing it is that you control your life investments instead of the life insurance company managing them on your behalf. Not only will this pave the way for you to make substantial interest gains on the cash-in value of your life insurance policy, it will also enable you to select the level of risk that you subject your life insurance fund to.
How does variable life insurance work?
A form of investment vehicles is how you can describe all life insurance products. Standard no cash-in value life insurance policies like term life insurance invest life insurance premiums in ultra low-risk funds that are often obliged to return a certain level of interest. This provides the life company with confidence in receiving a tangible level of return, which is transferred through to the life insurance policyholder by way of a guaranteed lump sum payment upon death or terminal illness.
Different from standard types of life insurance is variable life insurance as the life company hands the investment reigns over to the policyholder. A percentage of the fund to be invested, or in some cases, all of the fund to be invested by the policyholder may be allowed by the life company. As for variable life policies, they come with the disclaimer that the life insurance company takes no responsibility for the performance of the variable life policyholder's investments. Therefore, if the investments perform poorly the policyholder accepts the consequences that there will be little or no cash surrender value when the insurance is redeemed.
Do you think variable life insurance is for you?
As there is a high level of risk involved with this type of life policy, it is therefore very important to think long and hard about variable life insurance before opting to take it on. It is ideal if variable life policies should only be taken out by seasoned investors who know there way around the investment markets. A variable life policy is probably not for you if you have never invested in the stock market before.
On the other hand, this is what you stand to gain from taking out a variable life policy if you are confident in your investing abilities.
Variable life policy potential. Did you know that a variable life policy has the potential to make substantial interest gains that are much higher than on a standard term life insurance policy? If you invest well with a variable life policy that $100,000 could be worth $500,000 or more when redeemed even though you might only pay a small premium per month for a $100,000 pay out upon death with a standard policy.
What about tax advantages? The cash surrender values of variable life policies are exempt from taxation until the point at which they are redeemed. Also, gains made via variable life policies are not subject to capital gains tax (CGT).
How does variable life insurance work?
A form of investment vehicles is how you can describe all life insurance products. Standard no cash-in value life insurance policies like term life insurance invest life insurance premiums in ultra low-risk funds that are often obliged to return a certain level of interest. This provides the life company with confidence in receiving a tangible level of return, which is transferred through to the life insurance policyholder by way of a guaranteed lump sum payment upon death or terminal illness.
Different from standard types of life insurance is variable life insurance as the life company hands the investment reigns over to the policyholder. A percentage of the fund to be invested, or in some cases, all of the fund to be invested by the policyholder may be allowed by the life company. As for variable life policies, they come with the disclaimer that the life insurance company takes no responsibility for the performance of the variable life policyholder's investments. Therefore, if the investments perform poorly the policyholder accepts the consequences that there will be little or no cash surrender value when the insurance is redeemed.
Do you think variable life insurance is for you?
As there is a high level of risk involved with this type of life policy, it is therefore very important to think long and hard about variable life insurance before opting to take it on. It is ideal if variable life policies should only be taken out by seasoned investors who know there way around the investment markets. A variable life policy is probably not for you if you have never invested in the stock market before.
On the other hand, this is what you stand to gain from taking out a variable life policy if you are confident in your investing abilities.
Variable life policy potential. Did you know that a variable life policy has the potential to make substantial interest gains that are much higher than on a standard term life insurance policy? If you invest well with a variable life policy that $100,000 could be worth $500,000 or more when redeemed even though you might only pay a small premium per month for a $100,000 pay out upon death with a standard policy.
What about tax advantages? The cash surrender values of variable life policies are exempt from taxation until the point at which they are redeemed. Also, gains made via variable life policies are not subject to capital gains tax (CGT).
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