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Variable Life Insurance
What does variable life insurance mean? A permanent life insurance contract that provides financial compensation to the named beneficiaries in the policy in the event of the insured's death. The insurance company guarantees payment of a minimum amount plus an additional sum according to the performance of a separate account, which is usually invested in equities, stocks, bonds, money market funds or other relatively high-yielding securities.
Unlike whole life insurance, variable life insurance allows you to manage your own investment portfolio, which is why it tends to be the most expensive type of cash value insurance.
One important thing that people must realize, since you are in completely control of your portfolio, if you are not that knowledgeable in the investing area, please consult with an advisor before you make any bad decisions. The insurance company does not really care or guarantee any amount for the actual cash value of your variable life insurance policy.
There are also substantial tax advantages to variable life insurance policies. The cash value portion is not taxed until the policy is redeemed. This means that unlike your own personal investment portfolio, your profits are not subjected to capital gains tax even when you change investments - which means they grow tax-deferred.
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