Permanent Life Insurance / Variable Life Insurance

Variable life insurance is the life insurance type with the most emphasized investment component. You can invest the cash value portion of the policy in different securities portfolios. Usually, your insurance company offers you a choice of funds, in which to invest the money. Your investment decisions would depend on your goals and risk aversion.

Premiums are typically fixed with variable life insurance. The cash value and, in some cases, the death benefit depend on the success of your investments. As a result, the value of your policy can grow substantially, but you also take more risk than you do with other types of life insurance. Some variable life policies guarantee a minimum death benefit.

Because of the control it gives, the variable life insurance is the most expensive permanent insurance type. To sell variable life insurance, insurance companies need not only a valid life insurance license, but also a registration with the National Association of Securities Dealers (NASD).

Variable life insurance is appropriate for you if you are good at investing and are ready to take the risk. You can not only make more money than you would with the insurance company investing your cash value, you can make those money tax free, at least till you redeem your policy. Profits from life insurance cash value management are not subject to capital gains tax even if you change investments.

As with other permanent life insurance policies, you can use the cash value as premiums, borrow against it, or save it.

There are both universal and whole life versions of the variable life policy.

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