Is Variable Life Insurance Right for You?

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Variable life insurance is a type of permanent life insurance, which means it offers coverage for the policyholder for the rest of their life if they pay their premiums. Like other types of life insurance, variable life insurance offers a death benefit to financially support family members or other beneficiaries when the insured individual passes away. However, variable life insurance also includes an investment component. This allows the policyholder to invest part of their premium payments into stocks, bonds, mutual funds, and other investment options.

Is Variable Life Insurance Right for You?

Variable life insurance comes with a variety of benefits, as well as a few risks. We would like to quickly explain a few key advantages and disadvantages to help you decide if variable life insurance is the right choice for you.

Advantages of Variable Life Insurance:

  • Potential for High Returns – Because variable life insurance policies involve many investment opportunities, there is great potential for high returns. There’s far more potential to increase your investment compared to other types of permanent life insurance, like whole or universal life insurance options.
  • Cash Value Growth – The portion of the premium payments that you invest accumulate tax-deferred cash value. You can withdraw from or borrow against this cash value for retirement or other needs.
  • Flexibility – Variable life insurance allows policyholders to adjust their premiums as needed to account for financial changes throughout their life.

Disadvantages of Variable Life Insurance:

  • Investment Risk – If your investments perform poorly, your policy’s cash value may decrease, and your death benefit may be put in jeopardy.
  • Death Benefit Is Not Guaranteed – The investment aspect of variable life insurance is the main part of its appeal, but if having a death benefit that can be paid to your loved ones is more important to you, variable life insurance may not be for you.