Variable Life Insurance
Variable life insurance allows a person to invest in different types of funds such as money market, bonds, equities, and various combinations of different types of investments to affect the cash value in a positive way. The value of the death benefit can change depending upon the worth of the investments. The amount to invest in funds can be a portion of the actual premium so if there are losses incurred it will not affect the entire balance of the cash value. Variable life insurance allows the policy owner to earn money without being taxed on those earnings until the policy is cashed out. However, there is a possibility of losses as well. "And that which thou sow, thou sow not that body that shall be, but bare grain, it may chance of wheat, or of some other grain" (1 Corinthians 15:37).
Policies may vary depending upon the insurance company and what investments they allow for variable life insurance. Some choices for investing a portion of a premium include equities and bonds both nationally and/or globally. Policyholders should be able to see what is happening with their money on a daily basis when part of the premium is invested. In addition, they should have some say as to what the money is invested in. Many reps will suggest being diversified by investing in a mix of choices. Insurance companies may vary in what they allow or options that they offer on investments. They should offer a variety of investment choices in order for it to be attractive to the maximum amount of people or policyholders.
The death benefit at the time of death is based upon the face amount of the policy plus any cash value that occurs because of investments. Variable life insurance that has returns on investments may more than pay for the premiums on the policy. When the investments are poor the policy can lapse because the investment is not enough to make the premiums. If this happens then the policyholder needs to be informed so premiums can be paid or there will be no death benefit available when needed. A person considering this type of policy should consider making the premiums every month without considering the investments so the policy will not be in danger of lapsing.
The costs of variable life insurance is usually more expensive compared to whole, term and universal but there are some benefits that may make it a better choice. Advantages to consider are tax free earnings and the increase of the cash benefit at the time of death. The policyholder should realize that withdrawals and loans can affect the cash benefit as well. Term insurance is only good for a certain period of time but may be able to be renewed or converted to whole life and does not increase in value or have cash benefit. Whole life policies have guaranteed cash value and the value can be borrowed against but borrowing reduces the death benefit until the money is paid back. Interest is charged to the policyholder when paying back the borrowed amount.
Amounts to invest are up to the policyholder and withdrawals or borrowing from variable life insurance is usually alright to do at any time without penalties. However, there may be surrender charges that actually penalize a policyholder for withdrawing funds before a set or specific time period. This time period could be as much as ten years or more. Some policies have restrictions about investments that if the policyholder dies before the maturity of the policy, the heirs of the insured can only get the amount of the death benefit and are not eligible to get the investments funds as well. A person considering this should find out about this type of contract and find out if there is another way to ensure that his or her heirs benefit from the investments.
The policyholder or owner has the option of choosing the investments through variable life insurance which makes him or her financially responsible if the investments do poorly or if the policy lapses for nonpayment of the premiums. Premiums for variable life are usually much more costly then other life insurance policies but the policyholder can choose the amount of the death benefit. If however, the cash value exceeds a set percentage of the death benefit then legally it is no longer considered life insurance. When this happens the investment earnings become taxable in the same year that this occurs. So, there is a limit to how much money can be made on this type of policy in order for it to accomplish what it is created to accomplish and that is to protect one's heirs in case of death.
Some companies offer a large variety of investment choices to policyholders with variable life insurance. Separate accounts can be set up from the main account in sub accounts to be invested in stocks and bonds, and so on. A person interested in this type of life insurance should seek some advice from a financial counselor or insurance representative that is licensed to sell variable policies. Many people choose a variable policy for the tax advantages. The best advice overall is to get information about any type of fees that could cut profits when choosing this type of policy. There may be investment management fees that are deducted from the cash value. If this happens on poorly producing investments then there could be losses with the policyholder having to make up the differences to cover the premiums.
Variable Life Insurance QuotesVariable life insurance quote usually includes permanent coverage with adequate protection. With flexible payment options policies are affordable and most accumulate cash value that may be tax-deferred. Other investment options may be offered with a variable life insurance quotes. Choices may also include guarantees of death benefit options and a no-lapse option; plans and pricing can be quickly accessed online.
Some policies have options to the potential policyholder that loved ones will be taken care of after death. Consider what loss of income would mean to spouse and dependents after death. To ensure that loved ones are taken care of use wisdom in seeking the right policy. Other factors one needs to consider when comparing variable life insurance quotes might include payoff coverage for personal and business debts. Some sites on the Internet provide assistance through a life insurance calculator in determining how much insurance is needed. Viewing frequently asked questions on various sites usually help to answer questions regarding a variable life insurance quote.
Unlike other policies, some plans offer investment opportunities. Investment may involve some risks depending on fluctuations in markets or change in interest rates. Having investment flexibility with a variable life insurance policy is important. Over time investment options may need to change. A rider may be attached to the policy that provides coverage for spouse and dependents. Other options are available for different types of variable life insurance quotes when insuring loved ones.
When looking at plans, examine the additional fees that some companies add on in addition to the basic premium. These fees and charges usually consist of mortality and expense risk fees, a monthly expense fee, and other fund expenses. When changing account investment choices an account transfer fee could apply. For those who like to be able to adjust their investment options often, per transactions fees can add up very quickly. Other fees could apply in processing transactions, and federal income tax and penalties should be considered when making distributions. These are all important considerations when looking at variable life insurance quotes.
Having a plan to protect ones family in the event of death is an absolute necessity for anyone who has dependents. When seeking a policy, understand all the fees and charges that might be incurred. Consider all options carefully by doing a search on the Internet for a variable life insurance quote. "Counsel is mine, and sound wisdom: I am understanding; I have strength" (Proverbs 8:14)
Variable universal life insurance can offer many different options for the policyholder, while offering the added benefit of investing money during the term of the policy. It is important to understand this coverage before buying a policy, not only to make the most of the benefits, but also to understand what it will cost and what the policy will cover. Those who are unsure of whether or not variable universal life insurance is the right choice should talk with an insurance agent to get the facts about all the policies that are available.
There are several options of universal life insurance available for the policyholder, which can make it attractive to a variety of people. The policyholder can vary the amount of premium they pay by using part of earnings they have accumulated to cover part of the premium cost. Of course, this only can happen when the policyholder has accumulated enough to do this. Secondly, there is the option to vary the amount of death benefits that the beneficiaries are eligible for during the term of the policy. With both of these options, however, there are higher administration costs than there are for a straight forward universal life insurance policy.
There are benefits to purchasing this type of policy. First, is the benefit of being able to accumulate money in a tax-deferred savings account. People sometimes look at purchasing a universal life insurance policy as a combination of both coverage and investment for their future. Second, is the benefit to variable universal life insurance policies of not having to pay the premium during the entire term of the policy. When the payments accumulate in the savings account to a certain amount, the policyholder no longer needs to make premium payments to keep the policy in force.
"The LORD is my light and my salvation; whom shall I fear? the LORD is the strength of my life; of whom shall I be afraid?" (Psalm 27:1). Faith along with a smart decision about coverage can be helpful in preparing for the unexpected. These policies usually are marketed to those who are looking to combine investments with their insurance. Furthermore, universal life insurance also is best for those who intend to keep their policy long-term, since it takes about 15 years for the policyholder to be eligible for any return on the variable universal life policy. In the past, policies were not necessarily recommended for people, unless they planned to live into their 70s. But in this day where people are living into their 70s and even their 80s, variable universal life insurance has become a very viable coverage and investment option.