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Variable Life Insurance
by : Donald Lusan
Variable life insurance is like attaching a life insurance
policy to your stock portfolio. Your portfolio may contain
stocks, bonds, money market etc. which would give you the
tremendous opportunity to earn awesome profits on your
investments. You will choose where your money is invested, but
as a result you also bear the risk. It is therefore incumbent on
you to do some research before you get started.
A variable life insurance policy has a guaranteed death benefit
and accumulates a cash value which is based on an assumed
minimum interest rate of about 4%. This, however, may vary from
company to company. Your investment will be separate and apart
from your life insurance policy. You make the decision as to how
much is applied to investment and how much to pay life insurance
premiums. You may invest in stocks bonds, money market or any
other applicable investment with the sole purpose of getting the
highest return possible on your money.
Any quotation you get for a variable life insurance policy must be accompanied by
a prospectus which should be carefully scrutinized by you. These
policies are regulated by the Securities And Exchange Commission
and The Commissioner of Insurance of the state in which the
policy is issued. The agent must have an NASD, National
Association Of Securities Dealers license, in addition to his
regular life insurance license, to sell these policies.
You are allowed to take a loan from your variable life insurance
policy. This loan, however, reduces the face amount of the
policy as well as the cash value, by the amount of the loan. The
normal assumption is that when you repay the loan the cash value
will revert to what it was before and the face amount also. That
is not necessarily so. Bear in mind that while the loan was
outstanding, the amount of the loan was not there to invest, so
your profit will be less that amount that would have been earned
on that money. Now, you attempt to recover your life insurance;
you may be able to do so in most cases, however, if your health
should change you may not be allowed to recover the life
insurance portion.
For additional information on variable life insurance click: Variable Life Insurance
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