Variable life insurance
Variable life insurance differs from whole and universal life in that policy owners direct the distribution of their premium payments among several different accounts or funds rather than of the company's choosing. Typical account choices are: common stock, bond, mortgage, and money-market accounts.
With a variable policy, the death benefit and cash value benefits vary in relation to the value of the investments underlying the policy. If the value of the accounts increases, so will the benefits; if the value of the account decreases, so will the benefits, subject to a minimum guarantee. Variable life insurance is more risky to the policy owner than the other forms of cash value insurance, but there is a possibility of greater returns.
Variable life insurance is so much like "normal" investing that agents offering it must be licensed securities dealers and registered with the U.S. Securities and Exchange Commission.
InsureMe recommends that variable and variable-universal policies are most suitable suitable for long term obligations and those who are more active investors and for estate growth and death tax liquidity.
The answer on this page was edited based on source material from the Ohio Dept. of Ins. and InsureMe. These pages are no longer being updated. --Webmaster
