Sage-Tips

What type of insurance is variable life?

permanent life insurance policy
Variable life insurance is a permanent life insurance policy with an investment component. The policy has a cash-value account, which is invested in a number of sub-accounts available in the policy. A sub-account acts similar to a mutual fund, except it’s only available within a variable life insurance policy.

What is a variable whole life insurance policy?

Like whole life, Variable Life provides life-long protection with death benefits, fixed premiums, and builds up cash value. This policy remains in place for the whole life of the insured individual unless the policy lapses or is cancelled.

Is a variable life insurance policy a security?

Variable Life Insurance. Variable life is a type of security that offers fixed premiums and a minimum death benefit. Unlike whole life insurance, its cash value is invested in a portfolio of securities. However, the policy’s investment return is not guaranteed and the cash value will fluctuate.

In what year was variable life insurance introduced?

In fact when variable universal life policies first became available in 1986, contract owners were able to make very high investments into their policies and received extraordinary tax benefits.

Can you cash out a variable life insurance policy?

For variable life insurance policies, if you withdraw a greater amount of cash value than the total amount you’ve paid in premiums, you pay taxes on the difference. This also applies if you surrender the policy. You would have to pay surrender charges to make a withdrawal during the first several years.

What is the primary risk of a variable life insurance policy?

Variable life insurance involves investment risks, just like mutual funds do. If the investment options you selected for your policy perform poorly, you could lose money, including your initial investment.

Is Variable Life Insurance permanent?

Variable universal life is a type of permanent life insurance policy with features that include cash value, investment variety, flexible premiums and a flexible death benefit.

Can I withdraw my VUL?

Just like Rod, a VUL policyholder can access the fund value in case of financial need. Unlike in traditional policies, this is treated as a withdrawal rather than a loan. Thus, the amount withdrawn does not incur any interest. Better yet, the amount withdrawn is not deducted from the face amount.

Who regulates variable life insurance?

Variable life insurance and variable annuities are considered investment products by law. Because these variable policies are investment products, they fall under the jurisdiction of the Securities and Exchange Commission. These laws are in conjunction with regulations from state life insurance legislators.

Which of the following are the features of a variable life insurance policy?

With a variable universal life insurance policy, the policyholder has the flexibility to choose payment arrangements, vary the amount or timing of premium payments, and generally exercise more freedom over how to manage the cash value and premium obligations of the insurance policy.